Feasibility Analysis for Rockford, Illinois Convention Center and

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					            C.H. JOHNSON CONSULTING, INC.
                    EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




     Feasibility Analysis for Rockford, Illinois
                 Convention Center and Hotel


                                  January 2010




6 East Monroe St. • 5 Floor • Chicago, Illinois 60603 • Phone: 312.447.2010 • Fax 312.444.1125
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                                www.chjc.com • info@chjc.com
Overview
Convention Center/Hotel Development Analysis for Downtown Rockford, Illinois
by C.H. Johnson Consulting, Inc.

Hospitality and real-estate consulting firm C.H. Johnson recommends that the Rockford area develop a
high-quality convention center and comparable hotel in downtown Rockford for the following economic
development reasons:

    •   It will significantly improve the economic health of our community. According to the study, a
        convention center/hotel will add $36.6 million annually to our local economy, increasing the impact
        of the region’s visitor industry by more than 10 percent.

        There is a nationwide demand for meeting and conference space that is not being met. As the
        economy rebounds and business travel increases, more people pursue training/education and
        communities ramp up efforts to attract more commerce, this trend will continue. Rockford is not
        competitive in this market and is losing these types of meetings and conferences to other regions,
        as well as the economic impact these meetings and visitors bring.

    •   In light of the 15.5 percent unemployment in the greater Rockford area, the highest in Illinois, such
        a development would, according to the study, provide 450 immediate high-paying construction jobs
        (for two years) as well as 296 long-term hospitality industry jobs, many of which would be full-time
        with benefits.

    •   It would diversify the area’s hospitality market, increase the visibility of the Rockford area and
        maximize and compliment downtown redevelopment efforts.

    •   There is a good momentum now with several downtown projects and this could add energy and
        assurance to the overall success of downtown redevelopment. Downtown Rockford is re-emerging
        as an economic center and resource for the entire community. A sustained investment like a
        convention center/hotel development would add to that momentum. Communities with distinct
        downtown personalities are more appealing to residents, visitors and employers.

    •   Such a development would help further establish the Rockford area as a serious Midwestern
        destination for leisure and group travel, adding significantly to the $300-million-plus economic
        impact of visitors annually.

Benefits

    •   According to the study, the convention center/hotel would have a $36.6 million economic impact
        annually to the local economy. The convention center/hotel would pay $8.4 million in wages and
        salaries for the jobs they create. There would be additional economic benefits as restaurants and
        other retail establishments, including those located downtown, benefit from the anticipated 120,000
        additional visitors to the Rockford area.

                                                 —MORE—
Overview/Convention Center/Hotel, Page 2 of 2

    •   The presence of a convention center/hotel would generate $2.7 million in tax revenues. This is over
        and above the operating business of the convention center hotel.

Cost

According to the study, total cost for a 58,500 square foot convention center with a 200-room focused
brand hotel would be approximately $55 million; $30 - $35 million for the convention center and $22 million
for the hotel. The convention center could be expanded at a later date in a Phase 2.

    •   A convention center in this market is projected to host 231 events a year. In Year 5 it could
        generate $2.65 million in operating revenue a year and cost about $2.86 million to operate,
        requiring $210,000 in operating allowance. After Year 5, the operating allowance would be in the
        low $200,000s, which is customary and within industry standards.

    •   The hotel is projected to stabilize at 65 percent occupancy, with an average daily room rate of
        $97.30. In Year 5 it could generate about $8.1 million in revenue and cost about $5.8 million to
        operate, for $2.3 million in operating net income.

                                                   ###

A complete copy of the report is available at gorockford.com.
Frequently Asked Questions
About the Proposed Convention Center/Hotel for Downtown Rockford, Illinois

Q:     Why does Rockford need a convention center/hotel?

A:     It will significantly improve the economic health of our community. According to the study, a
       convention center/hotel will add $36.6 million annually to our local economy. It will create new
       jobs at a time when our unemployment is 15.5 percent, the highest in Illinois; 450 construction
       jobs per year for two years and 296 full-time jobs created by the convention center/hotel.

       In addition, there is a nationwide demand for meeting and conference space that is not being met.
       This trend will continue as the economy rebounds and business travel increases, more people
       pursue training/education and communities ramp up efforts to attract more commerce.

       Rockford is at a competitive disadvantage in this market and as such is losing these types of
       meetings and conferences to competing regions, as well as the economic impact these meetings
       and visitors bring, because it lacks facilities that are large enough to hosts them. Visitors generate
       more than $300 million in economic impact each year for the Rockford area, and according to the
       study, a convention center/hotel would increase that by more than 10 percent.

Q:     Why downtown?

A:     The City of Rockford and the Rockford Area Convention & Visitors Bureau requested that this
       analysis focus on downtown. This study shows that a downtown convention center/hotel could
       create enough demand to provide overflow to the hotels in the I-90 corridor while supporting the
       ongoing renewal of downtown.

       The timing is right. Developing a convention center and hotel would be part of the overall effort to
       redevelop Rockford’s downtown core and would serve as a catalyst for new private investment in
       downtown. Additionally, convention delegates indicate a clear preference for attending events in
       downtown areas where they can spend their free time and money at restaurants/bars and shops.

       There is a good momentum now with several downtown projects (expansion of Burpee Museum
       and Discovery Center, new Federal Courthouse, renovation of MetroCentre and more), growth in
       retail and restaurants (Bamboo, Kuma’s, Restoration Café, etc.) and other recent efforts
       (Coronado Theatre, Webbs Norman Center, reopening of Main Street) and this could add energy
       and assurance to the overall success of downtown redevelopment. Downtown is re-emerging as an
       economic and quality of life center. A sustained investment like a convention center/hotel will be
       a resource for the residents of this community.

       Lastly, communities with distinct downtown personalities are more appealing to residents, visitors
       and employers.


                                                —MORE—
FAQ/Convention Center/Hotel, Page 2 of 3

Q:     What will this cost?

A:     According to the study, a 58,500 square foot convention center and a 200-room hotel would cost
       approximately $55 million; $30 - $35 million for the convention center and $22 million for the hotel.
       The convention center could be expanded at a later date in Phase 2.

Q:     How will it be financed?

A:     There are a number of financing models that other communities have followed. Examples cited in
       the study include different types of bond financing, user fees, meals taxes and hotel taxes, tax
       increment financing and others.

Q:     Would public money be used to build or operate a convention center?

A:     In most communities, convention centers are built and operated with a combination of public and
       private funds, and that is likely the way it will happen here. Local facilities such as SportsCore
       Two, Carlson Ice Arena and the MetroCenter were built in this way and continue to operate with
       some public subsidy, along with revenue from users of the facilities. The community benefits from
       the jobs and economic activity created and the private investment generated as a result of the
       ongoing successful and efficient operation of the facility.

Q:     What have convention centers done for other communities?

A:     As part of this analysis, seven other convention centers/cities were examined. In all cases,
       according to the study, each community is satisfied with the cost/benefit relationship with these
       facilities. It is the judgment of C.H. Johnson Consulting that such a venue in downtown Rockford
       would fare as well. While these types of publicly supported facilities generally require some
       operating allowance, that is greatly outweighed by the economic impact they have on their
       communities.

       Included in the analysis were:
         • Schaumburg Convention Center and Renaissance Hotel, Schaumburg, Illinois
         • Bayfront Convention Center and Sheraton Hotel, Erie, Pennsylvania
         • St. Charles Convention Center and Embassy Suites Hotel, St. Charles, Missouri
         • Grand Wayne Convention Center and Hilton Hotel, Fort Wayne, Indiana
         • Three Rivers Convention Center and Hilton Garden Inn, Kennewick, Washington (southeast
            Washington)
         • South San Francisco Conference Center, South San Francisco, California
         • Peoria Civic Center, Peoria, Illinois

       For example, the Peoria Civic Center includes an arena, theater, exhibit hall and meeting space. It
       recently underwent a $55 million expansion and upgrade to meet the growing demand for the
       facility. Downtown Peoria is enjoying an urban renewal for a number of reasons, including the PCC
       expansion.
                                               —MORE—
FAQ/Convention Center/Hotel, Page 3 of 3

Q:     Who supports this project?

A:     A wide variety of public, private and labor leaders and organizations have already voiced their
       support, as the project is being introduced. As discussion continues, more support is expected.

Q:     What happens next?

A:     Community focus meetings will be held so people have an opportunity to learn more and provide
       input. A task force of community and business leaders will make site visits to comparable
       convention center/hotels to examine how they are benefiting those communities, how they operate,
       were funded, etc. With the proper planning and resources, this proposed project can grow jobs,
       create positive economic impact and become a valuable asset to our community.

                                                  ###

A complete copy of the report is available at gorockford.com.
C.H. JOHNSON CONSULTING, INC.
     EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




January 7, 2010

Mr. John Groh
President/CEO
Rockford Area Convention & Visitors Bureau
102 North Main Street
Rockford, Illinois 61101

Subject:     Feasibility Analysis for a New Convention Center and Hotel in
             Downtown Rockford

Dear Mr. Groh:

C.H. Johnson Consulting, Inc. (Johnson Consulting) is pleased to provide this
analysis to investigate the merits of a potential Convention Center and Hotel
development in downtown Rockford, Illinois.

This study includes an overview of the events and meetings industry, different
types of meeting facilities that are developed regionally and nationally and our
assessment of the correctly sized convention venue and hotel for Rockford based on
comparable facility experience, and existing market conditions. We provide initial
guidance on the recommended approach to own and operate such a facility, and
have prepared initial demand and operating revenue and expense projections for an
appropriately sized venue and associated hotel.

Operating estimates presented in this study are based on trends, assumptions, and
current market factors, which usually result in differences between the projected
results and actual performance. As events and circumstances often do not occur as
expected, those differences may be material. Johnson Consulting has utilized
sources deemed to be reliable, but cannot guarantee their accuracy. Moreover,
estimates and analysis presented in this study are based on trends and assumptions,
which usually result in differences between the projected results and actual results.
Because events and circumstances frequently do not occur as expected, those
differences may be material. Johnson Consulting has no responsibility to update this
report for events and circumstances that occur after the date of this report.

In our judgment, this report equips the Rockford Area Convention & Visitors
Bureau, the City of Rockford, and Winnebago County to make further decisions
about the merits of such a project, identifies required resources needed to make
such a project feasible from the private sector’s perspective, and is appropriate for
use as an informational piece to send to candidate developers.




       6 East Monroe St. • 5 Floor • Chicago, Illinois 60603 • Phone: 312.447.2010 • Fax 312.444.1125
                             th

                                       www.chjc.com • info@chjc.com
C.H. JOHNSON CONSULTING, INC.
    EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




We have enjoyed serving you on this engagement and look forward to providing
you with continuing service.

Sincerely yours,




C.H. JOHNSON CONSULTING, INC.




      6 East Monroe St. • 5 Floor • Chicago, Illinois 60603 • Phone: 312.447.2010 • Fax 312.444.1125
                            th

                                      www.chjc.com • info@chjc.com
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




INTRODUCTION
Rockford, Illinois is a developing city in northern Illinois and is well located in
relation to Chicago, Milwaukee, and Madison. The Rockford Area Convention &
Visitors Bureau (RACVB) is trying to determine the feasibility of a new convention/
conference center and hotel for the area and the economic impact these facilities
would have on the local community.

The City of Rockford and the RACVB have recently launched several initiatives to
promote the redevelopment of the historic downtown area and are reevaluating the
development of a new hotel and convention/conference center as part of the
downtown redevelopment effort. Johnson Consulting was directed to focus solely
on the downtown location for this report, not at the expense of the I-90 corridor, but
to leverage and create downtown development energy.

Prior feasibility studies have been conducted by C.H. Johnson Consulting, Inc.
(Johnson Consulting), which have analyzed the feasibility of a convention/
conference center and hotel in the City of Rockford. Both downtown and I-90
options were evaluated in prior reports. These prior reports found opportunity for
either location, citing that the suburban location would pick the low-hanging fruit,
but would continue the erosion of the downtown core. Further, at that point, the
City felt it had other priorities and challenges that required immediate attention and
delayed further consideration of either option.

Since that time, many developments have occurred. First, the City has renovated the
MetroCentre, exceeding Johnson Consulting’s hope for its ambitions for the project.
A riverwalk is moving forward and talk exists about converting the Ingersoll
Building into a 365-day use as a whitewater canoeing recreation center. A new
federal courthouse is also under construction. It is felt that a convention center and
associated hotel in downtown Rockford would help support these developments,
add velocity to the redevelopment of the downtown core and contribute to the
community’s identity as a meeting destination. A brief synopsis of these prior
reports is located before the Executive Summary in this section.

Rockford currently does not have any convention/ conference space or a hotel in
the downtown area that can adequately serve the conference and meetings market.
Currently, the majority of hotels in the area are located in close proximity to the I-90
interstate highway, a good distance from the traditional downtown of Rockford.
The lack of meeting space in the Rockford area and hotel space downtown
influences the city’s ability to draw regional and national visitors for events in
downtown Rockford that could aid in the redevelopment goals of the City. Further,
since the Renaissance Schaumburg Convention Center has now opened relatively
nearby, it is felt that a smaller, more niche venue may be better suited for Rockford,
especially if the downtown core is targeted for the project.




Rockford, Illinois                                                        Section 2 Page 1
Convention Center and Hotel Feasibility Analysis                             January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




In light of the above factors, the RACVB commissioned Johnson Consulting to
determine the feasibility of a new hotel and convention/ conference center, and
associated economic impacts located in the downtown area.

Johnson Consulting is a real-estate consulting firm with specialized experience in
convention/ conference centers, sports venues, hotels, multipurpose facilities, and
TIF districts. The firm has worked on other projects in Illinois including prior
convention/ conference and hotel studies for the City of Rockford, master planning
for McCormick Place in Chicago, the Peoria Civic Center Renovation, Springfield
Civic Center renovation planning, and several other convention/ conference and
hotel projects in the state and region. This report presents the results of the analysis
and informs the Rockford Area Convention & Visitors Bureau (RACVB) and other
interested parties about the market potential and critical issues that need to be
addressed in order for the convention/ conference center and adjacent hotel to
succeed.

This report presents the results of the feasibility analysis and outlines the
recommended size of the convention/ conference center and hotel and the demand
and financial mix the center and hotel can expect to achieve. The findings in this
report are intended to enable Rockford to make the best decisions concerning the
development of the proposed convention/ conference center and hotel. To provide
a framework for this report and its conclusions, the report includes the following:

         Section 1 – Report Letter.

         Section 2 – Introduction, Methodology Review, and Executive Summary.

         Section 3 – Economic and demographic overview of Rockford; a profile of
         regional convention/ conference facilities; the current hotel and meeting
         space supply; air service, transportation, and access; and other important
         market indicators.

         Section 4 – Meeting-industry trends and regional facility inventory.

         Section 5 – Analysis of comparable facilities that will serve as a basis for the
         potential of the convention/ conference center and hotel.

         Section 6 – Facility recommendations; and demand and financial projections.

         Section 7 – Economic impact analysis and recommendations.




Rockford, Illinois                                                         Section 2 Page 2
Convention Center and Hotel Feasibility Analysis                              January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




METHODOLOGY
In order to complete its analysis and recommendations concerning a convention/
conference center and hotel, Johnson Consulting performed the following tasks:
         Met with and interviewed individuals involved in the local meetings,
         hospitality, and economic development industries,
         Interviewed management of local hotels that have meeting and convention/
         conference facilities; interviewed several tourism bureaus and airlines.
         Summarized the functions of convention/ conference centers and described
         various types of events and event sponsors,
         Analyzed economic and demographic characteristics of Rockford and the
         surrounding region, such as population, the local economy, and other
         critical economic and demographic traits,
         Described the current position of Rockford and the broader region in
         relation to the regional, national, and international meetings market, as well
         as recent trends,
         Analyzed existing convention/ conference and hotel facilities in comparable
         markets that are similar to what could be developed in Rockford,
         Surveyed potential facility users on their thoughts about the facility and
         local market,
         Analyzed current and expected future trends in the meetings and
         convention industries, including locations, event types, and event attributes,

         Developed recommendations regarding the optimum size and mix of spaces
         for a convention/ conference center and hotel in Rockford,

         Discussed and analyzed various options regarding facility management and
         operation,
         Projected future demand projections for the planned convention/conference
         center and hotel in terms of annual events and attendance, hotel room
         nights, average daily rate, revenues and expenses, and
         Performed an economic impact analysis to determine the benefits the
         Rockford Region might experience.


RECAP OF PRIOR REPORT
2003 Master Plan Study & Follow-On-Work – The 2003 study was initially focused
on analyzing the conversion of the Ingersoll building into a convention center.
Upon analysis, the potential conversion of the Ingersoll building into a convention




Rockford, Illinois                                                       Section 2 Page 3
Convention Center and Hotel Feasibility Analysis                            January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




center was deemed inappropriate. The parameters of the study were expanded to
include analysis of the ideal program requirements for a new facility as well as the
most appropriate location. The 2003 study called for an initial development
program of an 80,000 net square foot exhibition hall, 15,000 net square feet of
meeting space, and a 15,000 net square foot ballroom, with subsequent phases of
development resulting in a fully developed facility with a 200,000 net square foot
exhibit hall, plus additional meeting and ballroom space. The 2003 study
determined that the required site should contain approximately 30 acres of land or
contemplate a more dense and extensive development approach.

Given the results of this analysis, Johnson Consulting contemplated the potential
development of a center in the downtown area, as well as between Mulford and
Fairview and the I-90 corridor. The long-term expansion needs, in combination with
the ancillary development (e.g. hotel rooms) required to support a convention
center as recommended indicated that, at the time of the 2003 study, the I-90
corridor would provide a quicker return in the near-term and require less ancillary
development, than the other two locations, but would contribute to the erosion of
downtown. The downtown option was noted to have advantages such as unique
entertainment and dining, a sense of place including the river and cultural assets.

After the 2003 study was conducted, Johnson Consulting participated in a variety of
convention center task force meetings and public presentations, from 2004 to 2005,
to discuss the 2003 master plan study and ways to execute the recommendations.
After 2005, the effort to build a new convention center and hotel cooled until in
2008/2009 when the idea was brought back into consideration, but focusing solely
on a downtown location.


EXECUTIVE SUMMARY
Through sustained and thoughtful initiatives and investment in projects such as a
new convention/ conference center and hotel, downtown Rockford can be provided
with an revitalized identity and re-emerge as an economic center and resource for
the community. The realization of this potential will require targeted and continued
investment in the downtown area. As this occurs, the area will develop a regional
and national identity (in certain niches) as a destination for conventions,
conferences, and other events, and endow downtown Rockford with a new sense of
energy and vitality.

The number of current initiatives underway (or at least being studied) provides
strong emphasis on the high level of interest in the redevelopment of downtown
Rockford. The interest in downtown redevelopment is present but financial
considerations for such projects need to be carefully considered and weighed
against long-term economic benefits to the community. The scale and nature of




Rockford, Illinois                                                     Section 2 Page 4
Convention Center and Hotel Feasibility Analysis                          January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




projects that are required to shift the pendulum towards redevelopment of the
downtown area is a fairly large undertaking. It will require core infrastructure
developments that repeatedly invite visitors into the area, encourage them to
circulate after events, and contribute to the enrichment of the community’s quality
of life.

Despite this progress (i.e., construction of the federal courthouse, remodeling of
MetroCentre, removal of the Main Street Mall), however, downtown Rockford is
plagued by an unclear identity and distinct absence of vitality in certain areas.
While new projects such as the development of a new federal courthouse will
contribute to the ongoing, incremental progress, if downtown is truly going to
emerge, more immediate and more clearly targeted steps must be taken. The
Coronado Theatre, Davis Park, and the MetroCentre provide a potential foundation
on which to build, but large-scale investment and ancillary development needs
must be combined under a common vision. Further, since downtown remains
disconnected from the I-90 corridor, Rockford will need to develop more effective
connections to its outlying urban and suburban areas to be a successful destination.

Although Rockford has the regional appeal to attract meetings and events, the area
has not been marketed extensively within the meetings industry. Part of the reason
is that Rockford has not had a modern facility that is appropriate for many large
meetings and events, but once such a facility is added to the marketplace, it will
help to raise the awareness of the area. Rockford does have a very well run RACVB,
which is very effective in marketing the Rockford area for sports-oriented events
and could allow for a new convention/ conference center to be marketed very
effectively.

Rockford’s competitive set includes very strong competitors like Chicago,
Schaumburg, Peoria, Springfield, Madison and others. In order for Rockford to
compete effectively with those in the middle and higher markets, Rockford needs to
develop a hotel and convention/ conference center package to offer. Specifically, the
Schaumburg Convention Center has developed its facility program along the lines
of what Johnson Consulting recommended the City of Rockford should build in
2003. As a result of the more developed regional convention market and based on
our assessment of Rockford area’s strength and potential, the following program is
recommended:

Convention Center – A facility with a total of 58,500 square feet of function space,
which includes a 31,500 square foot exhibit hall and 27,000 square feet of meeting
rooms is recommended. The convention center should focus on high-quality service
and facilities for conventions and conferences with light exhibits or dining,
emphasizing flexibility of facility design and operation. The plans for the proposed
site should be aimed to serve as the visual and pedestrian link between the
riverfront and the downtown area. Also, there is a strong pattern of development in




Rockford, Illinois                                                     Section 2 Page 5
Convention Center and Hotel Feasibility Analysis                          January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




the Rockford area focusing on the aerospace industry, which could be leveraged as
a prime user of conference center and hotel space. The convention center should be
designed to be expandable for future phases of development to support an exhibit
hall of up to 80,000 net square feet.

Hotel – 200 rooms targeting a “focused brand” from a major hotel chain such as
Marriott, Hyatt, Sheraton, or a variety of other brands. A focused brand is a limited-
service hotel, with higher quality finishes, and offers certain full-service amenities,
such as a restaurant, workout room, etc.

Development Cost - Based on preliminary projections, the total project costs,
including construction and soft costs, of a hotel and conference center of this
magnitude are expected to be between $55 and 65 million ($20 to $25 million for the
hotel and the remainder for the conference center). This however, is an initial
estimate, and is subject to fluctuations as the project evolves.

When the amenities of downtown Rockford are combined -- the MetroCentre,
Coronado Theater and the new hotel/convention center product are considered in
total -- the end product would result in a product better than that found in
Springfield and along the lines of the Peoria Civic Center, before it was expanded
and upgraded. However, in Rockford, the venues are separate, but close. This
allows for better deployment of each resource, but also the opportunity for efficient
administration and management of each.

Demand and Operating Projections

Upon stabilization, the proposed convention center is projected to accommodate 231
events and host 122,000 attendees annually. In a stabilized Year 5, the facility is
projected to generate approximately $2.65 million in revenues and cost
approximately $2.9 million to operate, resulting in a $213,000 operating deficit.
Going forward, the proposed conference center is projected to operate at a deficit in
the low $200,000s, which is typical for such facilities.

Assuming development of the convention center and a close association with the
hotel, (still undefined at this point), the 200-room hotel is projected to stabilize at 65
percent occupancy and an average daily rate of $97.30. In a stabilized Year 5, the
hotel is projected to generate approximately $8.1 million in revenue and cost
approximately $3.5 million to operate, resulting in approximately $4.6 million in
departmental operating income. When taking into account undistributed operating
expenses and management fees the hotel will yield net operating income of $2.4
million for debt service in Year 5.




Rockford, Illinois                                                          Section 2 Page 6
Convention Center and Hotel Feasibility Analysis                               January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




Economic and Fiscal Impact

Given the severe unemployment rate in Rockford, 15 percent, and a very high
poverty rate of 20 percent, a project that can bring in new outside investment of $20
to $25 million into the community and create hundreds of new direct and indirect
jobs is very important to keep in mind when evaluating the merits of investing in a
new conference center project. The following chart describes, in general, how a
convention center and hotel create economic impacts, not only for a new hotel and
conference center but for the entire city and county.

                                                  Figure 2-1




Upon stabilization, the proposed convention center is estimated to generate
approximately $25.4 million in total direct, indirect, and induced spending, $5.9
million in earnings, and 206 jobs, including impacts from both transfer spending
and net new spending, annually. Net new impact on the City level is projected to be
approximately $16.8 million in total direct, indirect, and induced spending, $3.8
million in increased earnings, and 136 jobs, annually. Annual fiscal benefits are
presented next.




Rockford, Illinois                                                     Section 2 Page 7
Convention Center and Hotel Feasibility Analysis                          January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                   Table 2-1
                         Rockford Conference Center, Rockford, Illinois
                                        Estimates of Annual Impact

                                                                            Taxable        Tax
                                                                 Rate      Spending     Revenues
                                                                            ($000's)     ($000's)

      Tax on General Retail
      State Sales Tax                                           6.250%                       $595
      Winnebago County Public Safety                            1.000%                         95
      Non Home Rule Sales Tax                                   1.000%                         95
        Total                                                   8.250%         $9,520        $785
      Tax on Eating/ Drinking at Restaurants and Bars
      State Sales Tax                                           6.250%                       $237
      Winnebago County Public Safety                            1.000%                         38
      Non Home Rule Sales Tax                                   1.000%                         38
      Redevelopment Fund (Metro) Tax                            1.000%                         38
        Total                                                   9.250%         $3,798        $351
      Tax on Hotels/ Motels
      State Use Tax                                              6.000%                      $121
      Redevelopment Fund (Metro) Tax                             1.000%                        20
      Hotel Operators' Occupation Tax/ Tourism Tax               5.000%                       101
        Total                                                   12.000%        $2,013        $242
      Tax on Auto-Rental
      Automobile Renting Tax                                    5.000%           $563         $28
      Tax on Income
      State Tax on Personal Income                              3.000%         $5,858        $176
      State Tax on Corporate Income                             4.800%         $5,072        $243
          Total Tax Revenues                                                               $1,826
      Source: Illinois Department of Revenue, City of Rockford Department of Finance,
      Johnson Consulting




Annual fiscal benefits are projected to amount to approximately $1.8 million in tax
revenues, which include $785,000 of retail sales tax, $351,000 in food and beverage
tax, $247,000 in hotel/motel tax, $28,000 in auto rental tax, and $419,000 in personal
and corporate income tax.

The recommended 200-room hotel is estimated to generate approximately $19
million in total direct, indirect, and induced spending, $4.3 million in earnings, and
support for the equivalent of 153 full-time jobs, all of which are net new impacts to
the City of Rockford and Winnebago County, annually. Annual fiscal impact of the
hotel is expected to amount to $1.6 million in tax revenues, which include $865,000
of general sales tax, $122,000 in food and beverage tax, $413,000 in hotel/motel tax,
$23,000 in auto rental tax, and $151,000 in personal and corporate income tax.




Rockford, Illinois                                                                        Section 2 Page 8
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                                                   Table 2-2
            200-Room Hotel at Rockford Conference Center, Rockford, Illinois
                                        Estimates of Annual Impact

                                                                                Taxable          Tax
                                                                  Rate         Spending       Revenues
                                                                                ($000's)       ($000's)

  Tax on General Retail
  State Sales Tax                                                  6.250%                           $655
  Winnebago County Public Safety                                   1.000%                            105
  Non Home Rule Sales Tax                                          1.000%                            105
    Total                                                          8.250%           $10,484         $865
  Tax on Eating/ Drinking at Restaurants and Bars
  State Sales Tax                                                  6.250%                            $82
  Winnebago County Public Safety                                   1.000%                             13
  Non Home Rule Sales Tax                                          1.000%                             13
  Redevelopment Fund (Metro) Tax                                   1.000%                             13
    Total                                                          9.250%            $1,316         $122
  Tax on Hotels/ Motels
  State Use Tax                                                   6.000%                            $202
  Redevelopment Fund (Metro) Tax                                  1.000%                              34
  Hotel Operators' Occupation Tax/ Tourism Tax                    5.000%                             169
    Total                                                        12.000%             $3,371         $405
  Tax on Auto-Rental
  Automobile Renting Tax                                           5.000%             $470            $23
  Tax on Income
  State Tax on Personal Income                                     3.000%            $2,077           $62
  State Tax on Corporate Income                                    4.800%            $1,857           $89
      Total Tax Revenues                                                                          $1,566

  Source: Illinois Department of Revenue, City of Rockford Department of Finance,
  Johnson Consulting




Combined, the economic impact of both the convention center and hotel are
estimated to amount to approximately $36.6 million of total spending, $8.4 million
of increased earnings, and 296 jobs, annually. Combined annual fiscal benefits are
estimated to amount to $2.8 million in tax revenues, which include $1.3 million of
general sales tax, $424,000 in food and beverage tax, $486,000 in hotel/motel tax,
$42,000 in auto rental tax, and $509,000 in personal and corporate income tax.

Again, this economic and fiscal impact is over and above the operating business of
the convention center, which provides 91 jobs for $4.1 million payroll and is
approximately $11 million operation, annually.




Rockford, Illinois                                                                            Section 2 Page 9
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Conclusions

In recent years, the growth rate in demand for exhibition space has been exceeding
the rate of increase in the supply of exhibition space. Primary and secondary
population centers throughout the country have added dedicated meeting facilities
to meet the increasing demand. In the case of Rockford, the success of a potential
convention/ conference center will be deeply rooted in the planning and
positioning of a facility:

         The trends and data detailed above point to long-term growth for regional
         exhibition facilities that are effective in carving out a market niche. As a
         community that has not cultivated an identity as a convention/tradeshow
         destination, Rockford will need to be aggressive in defining its industry
         niche, and cultivating a market.
         The importance of facility amenities, service quality, and overall
         affordability were all scored as motivating factors for meeting planners
         when deciding on a location for an event. As Rockford has already
         demonstrated to be an affordable market, it should leverage this fact. When
         it comes to facility amenities and service quality, Rockford will have the
         ability to design the facility to meet the needs of its target markets, which
         should enable the facility to distinguish itself from its peers.
         Except for a legacy of older and historic buildings and the Rock River,
         downtown Rockford has no clear image and no hotel rooms. While the long-
         term success of this area could be buoyed by a convention/ conference
         center, a center will not be successful unless hotel rooms and entertainment
         options are developed concurrently. In addition, visibility and
         transportation access to this area will present considerable challenges. The
         potential downtown whitewater park mixed-use development is very
         synergistic with a new convention/ conference center and hotel.

The market analysis in Section 3 indicates that there is an appeal and need for
Rockford to offer a convention/conference center facility. This need was supported
by interviews with meeting planners and tradeshow promoters. The facility should
serve as a regional venue for northern Illinois, and serve the meetings market, local
businesses and cultural, sports and entertainment sectors, as well as targeting
rotating conventions and tradeshows.

In order to develop an identity as a location for convention, tradeshow, and meeting
activity, Rockford will not only need to invest in a facility that signals its
commitment to attracting these activities, it will also need to ensure that it is




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effectively positioned in relation to its regional and national peers. Section 5 of this
report will provide comparison and analysis of the selected comparable facilities.

The events and meeting industry is strong and healthy as each of these comparable
facilities host hundreds of events a year. Further, each of these facilities supports at
least one but often more than one hotel next to their facility. It is believed that each
community is more than satisfied with the cost-benefit relationship with these
facilities. It is our judgment that a venue in downtown Rockford would fare as well
as the facilities profiled in these examples. Most governments or private sector
entities that develop an events facility realize the convention and conference
facilities incur a loss each year but this is greatly outweighed by the economic
impact they have on their community or private-sector establishment, as is the case
with each case study listed in this report.

Many locally may say that much of the demand expected from the new hotel will be
transferred from other hotels. In our judgment the preponderance of demand will
be net new to the Rockford area. In fact, if the conference center is built and has a
niche tenant, and other developments happen in the downtown area, the hotel will
in fact induce enough demand to support itself and feed room nights to other
properties in the community.

In order to diversify and increase the economic growth and redevelop the historic
downtown area, an initiative such as a hotel and convention/ conference center is
necessary. A hotel and convention/ conference center will have a tremendous
impact on not only the hospitality industry of Rockford but will also positively
influence a wide variety of business sectors in the area and help to provide much
needed jobs to the local community.




Rockford, Illinois                                                       Section 2 Page 11
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MARKET ANALYSIS
In order to analyze the market opportunity for new or improved public assembly
facilities and hotel venues, Johnson Consulting undertook a comprehensive review
of market conditions and characteristics in the Rockford metro area as well as the
extended region. The objectives of these analyses were to identify structural factors
that may affect the market’s ongoing competitive situation and gauge the level of
support that exists for the development of a new convention/ conference center and
hotel.

While characteristics such as population, employment, and income are not strict
predictors of performance for exhibition, entertainment, or cultural facilities, they
provide insight into the capacity of a market to provide ongoing support for
facilities or activities. In addition, the size and role of a marketplace, its civic
leadership, proximity to other metro areas, as well as competing or complementary
attractions affect the scale or quality of facilities that should be developed for a
particular market.

A tangential objective of this analysis is to examine the physical environment in
which facilities should be located in order to ensure the maximum contribution to
the local economy in the face of primary and secondary development requirements,
as well as potential public sector financial support. It cannot be emphasized enough
how important factors such as land availability, existing business concentrations,
and proximity to transportation are to the success of public assembly facilities. In
addition, factors such as a community’s economic development objectives, desire to
reposition deteriorated neighborhoods or commercial districts, or the need to
expand the potential funding base for projects are equally important considerations.

The key observations from the review and analysis are described below.

Demographic and Economic Overview

The City of Rockford (Rockford), located between major industrial and
transportation centers in the Midwest, is 65 miles northwest of Chicago’s O’Hare
International Airport and 90 miles east of the Mississippi River. The location allows
for easy entrance into regional, national, and international markets. Interstate 90
and U.S. Highway 20 place Rockford within a two-hour drive of Chicago (90 miles
southeast, metro area 8.3 million people), Dubuque (90 miles northwest, metro area
92,000), Madison (75 miles northwest, metro area 540,000), Milwaukee (100 miles
north, metro area 1.7 million), and the Quad Cities (125 miles southwest, metro area
375,000).




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Rockford is located in Winnebago County, which also includes the cities of Loves
Park, Machesney Park, and South Beloit. The county has a population of
approximately 300,800 in 2008 and is part of the Rockford Designated Market Area
(DMA 1 ). The Rockford DMA is also composed of Boone County, Ogle County,
Stephenson County, and Lee County, which had a combined population of 495,346
in 2008. With a population of 156,000, Rockford is the largest city in the region and
the anchor for the DMA. Table 3-1 displays the population trends for the United
States, the State of Illinois, the Rockford DMA, Winnebago County, and the City of
Rockford.

                                                            Table 3-1
                                            Historical Population and Growth Rates
                                              1990                      2000                2008 (Estimated)        CAGR*
                                     Population      % of DMA   Population     % of DMA   Population    % of DMA   1990-2008

    US                               248,709,873          --    281,421,906         --    305,316,813        --         1.1%
     State of Illinois                11,430,597          --     12,419,293         --     12,961,588        --         0.7%
       Rockford DMA                      412,117      100.0%        456,277     100.0%        495,346    100.0%         1.0%
         Winnebago County                252,910       61.4%        278,418      61.0%        300,800     60.7%         1.0%
           Rockford, IL                  146,403       35.5%        150,063      32.9%        156,596     31.6%         0.4%
    *CAGR = Compounded Annual Growth Rate
    Source: Demographics Now, Johnson Consulting




With a population of just over 481,000 in 2007, the Rockford DMA is home to
approximately three percent of Illinois’ total population. In addition, the annual rate
of growth for the DMA is slightly higher than the State but somewhat below the
national average.

Figure 3-1 following, is an overview of the five counties within the Rockford DMA
area




1A DMA is the formal term for what is more commonly known as a TV or broadcast market,
and provides a more comprehensive understanding of the population base for a certain area
compared to a Metropolitan Statistical Area (MSA).




Rockford, Illinois                                                                                             Section 3 Page 2
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                                                   Figure 3-1




Rockford has the opportunity to capitalize on a much larger population base than
the immediate MSA. With a broader vision, Rockford can take a step in creating
regional cohesiveness that reaches southern Wisconsin, northeast Illinois, the
western suburbs of Chicago, and northeastern Iowa. Portions of 13 counties are
within 50 miles of Rockford. Table 3-2 shows the counties and population within 50
miles of Rockford. Eventually, the facility will be able to draw from an even larger
base. Illinois, southern Wisconsin, and eastern Iowa would all be target markets of
Rockford.




Rockford, Illinois                                                    Section 3 Page 3
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                                                   Table 3-2

                     Counties and Population within 50 miles of Rockford


                                         Part of County
                                                        Total County        Pop. in 50-
                         County          within 50-mile
                                                         Population         mile Radius
                                          Radius (%)


                   Winnebago, IL               100%              300,800      300,800
                   Boone, IL                   100%               51,045       51,045
                   Stephenson, IL              100%               47,832       47,832
                   Rock, WI                    100%              159,821      159,821
                   Ogle, IL                    100%               56,012       56,012
                   Walworth, WI                 90%              102,994       92,695
                   Kane, IL                     80%              512,066      409,653
                   DeKalb, IL                   75%              101,041       75,781
                   Green, WI                    40%               35,146       14,058
                   McHenry, IL                  30%              321,030       96,309
                   Jefferson, WI               25%                80,823       20,206
                   Lee, IL                      20%               35,544        7,109
                   Dane, WI                     20%              470,838       94,168
                   DuPage, IL                   10%              938,397       93,840
                      Total                                     2,275,000    1,425,500

                   Source: US Census Bureau, Demographics Now



As the table indicates, within a 50-mile trade area there are approximately 2.3
million people, which provides a considerable base of support for events, facilities,
and if exploited, Rockford’s downtown and riverfront area. By providing a new
convention/conference center and hotel with various programming, Rockford
could entice different demand sectors from all of these counties.
While markets such as Madison, Milwaukee, and Chicago are not direct competitors
with Rockford for daily events, they do compete with Rockford in two respects.
First, Rockford competes with these markets for the attention and economic activity
of residents, both in the city, as well as in the periphery of its trade area. Second,
Rockford is also a source market for these areas, as Rockford residents travel to
these markets to shop, attend concerts and conventions, shows, and sporting events
that are not available in Rockford. This situation could be a challenge for Rockford
when trying to attract conventions and other events to the area, but the advantage
of Rockford is the affordability of the area in comparison with Chicago, Madison,
and Milwaukee.
This situation is particularly troubling to area residents, because during interviews
conducted by Johnson Consulting for this engagement, several reported that they




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must leave the market to shop more often than they stay and shop in the Rockford
market. The implication is that Rockford is leaking economic activity as well as jobs
and tax revenues out of its economy. Recapturing the economic activity that is
leaving the market is one of the most significant market challenges/opportunities
facing Rockford.

Figure 3-2 displays the age distribution of Rockford in 2007 (Estimated).

                                                                   Figure 3-2

                                             Age Distribution - Rockford City, DMA vs. US
                                      16.00%

                                      14.00%
                Share of Population




                                      12.00%

                                      10.00%

                                      8.00%

                                      6.00%

                                      4.00%

                                      2.00%

                                      0.00%
                                                        5 to   15 to 25 to 35 to 45 to 55 to 65 to 75 to
                                               0 to 4                                                      85+
                                                         14     24    34    44    54    64    74    84
                                        US     6.81% 13.41 13.99 13.50 14.22 14.45 10.88 6.56% 4.29% 1.88%
                                        DMA 6.41% 13.63 13.61 13.19 14.08 14.53 10.97 6.82% 4.61% 2.13%
                                        City   7.27% 13.66 14.03 14.26 13.00 13.12 9.96% 6.72% 5.26% 2.70%
    Source: DemographicsNow, Johnson Consulting




Compared to the United States as a whole, the Rockford area has a higher
percentage of the 5-34 age population, yielding a slightly younger overall age in the
market.




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Table 3-3 shows the projections for the city and DMA through 2012.

                                                   Table 3-3
                                   Rockford Population Projections
                                     City of Rockford               Rockford DMA
                                 Population       Annual %      Population   Annual %
                    Year
                                   (000's)         Change         (000's)     Change

                    1990           146,366             --        412,117         --
                    2000           150,093           0.3%        456,277       1.0%
                    2007           153,971           0.4%        481,582       0.8%
                    2012           156,393           0.3%        497,908       0.7%
                CAGR* 1990-2012                      0.3%                      0.9%
                *CAGR = Compounded Annual Growth Rate
                Source: Demographics Now, Johnson Consulting



Our research projects a slower pace of population growth in the city and DMA than
has been exhibited over the last decade, but the growth rates remain healthy. As the
table shows, officials anticipate an average annual population growth for the city
and DMA of approximately 0.3 percent and 0.9 percent, respectively, between 1990
and 2012.

Income and Employment

Table 3-4 summarizes the historical growth in income and employment in the MSA
from 1990 through 2005, based on the most recent data provided by the Bureau of
Economic Analysis.




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                                                    Table 3-4
                             Rockford, IL MSA Income and Employment
                                         Personal Income*           Total Employment
                        Year
                                          ($000)        % Change    (000's)   % Change

                        1990                $5,339           --         168       --
                        1991                 5,491        2.8%          167    -1.1%
                        1992                 6,096        11.0%         167     0.0%
                        1993                 6,270         2.8%         170     1.9%
                        1994                 6,762         7.9%         177     4.3%
                        1995                 7,005         3.6%         185     4.8%
                        1996                 7,319         4.5%         188     1.3%
                        1997                 7,668         4.8%         190     1.0%
                        1998                 8,106         5.7%         192     1.2%
                        1999                 8,361         3.1%         194     0.8%
                        2000                 8,722         4.3%         195     1.0%
                        2001                 8,624        -1.1%         191    -2.5%
                        2002                 8,841         2.5%         188    -1.1%
                        2003                 9,165         3.7%         188    -0.5%
                        2004                 9,253         1.0%         190     1.2%
                        2005                 9,692         4.7%         191     0.4%
                  CAGR** 1990-05                          4.1%                 0.8%
                  *Income figures are not adjusted for inflation.
                  **CAGR = Compounded Annual Growth Rate
                  Source: Bureau of Economic Analysis, Johnson Consulting



As shown, the Rockford metro area has experienced consistent growth in earnings,
averaging 4.1 percent annually. Employment has not experienced growth as robust
as earnings, with employment decreases in 1991, 2001 and 2003, all of which can be
correlated to larger national downturns in employment. The auto industry is a big
employer in the area and its softening could affect Rockford. Diversification is
important and such a facility, with a good amenity package could help in attracting
businesses to downtown.

Corporate Presence

Corporate presence is an important factor when looking at the feasibility of a new
convention/ conference center as many corporations use meeting facilities in their
local area. Table 3-5 shows the largest employers in Rockford City, by number of
full-time employees.




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                                                   Table 3-5
                                  Largest Employers - Rockford City
                                                                                           # of
 Name                                                            Industry
                                                                                         Employees

 Rockford Public Schools                                           Education                3,730
 Rockford Health Systems                                        General Hospital            3,003
 HamiltonSundstrand Corporation                      Aircraft and Aerospace Components      2,200
 Swedish American Health System                                   Health Care               2,988
 OSF St. Anthony Medical Center                                 General Hospital            2,303
 United Parcel Service                                         Parcel Sorting Hub           1,600
 County of Winnebago                                           Government Office            1,731
 Woodward                                                    Aircraft Comnponents           1,325
 Wal-Mart Stores                                                      Retail                2,750
 Cadbury Adams                                                   Chewing Gum                 902
 Source: Commerce Rockford, Johnson Consulting



As shown, the Rockford Public Schools employ 3,730 people in the local
community. Other significant employers are the Rockford Health Systems (3,003),
Hamilton Sundstrand Corporation (2,200) and Swedish American Health System
(2,988). The types of companies in the Rockford areas are relatively diverse and
offer general stability, especially due to the large education, health, and government
employment bases.
Rockford’s employment base has historically been manufacturing-oriented, and
despite the recent downswing in that sector, it prevails as a regional employment
leader. Over the last quarter century, Rockford, like many industrial-oriented
communities, has struggled under the weight of an economic transformation and
dispersion of economic activity as employers downsized or left the area. The lack of
diversity in the local employment base, as evidenced by the manufacturing sector,
coupled with volatility in Rockford’s core industries have contributed to the higher
than average unemployment rates in the Rockford area and slower than average
growth in non-farm income.
A positive development has been the evolution of the Chicago Rockford
International Airport from a general aviation facility to a dynamic commercial
service airport, which presently ranks as one of the most active cargo airports in the
nation when measured by landed weight. The airport is home to the second largest
hub-sorting facility in UPS’s system. In addition, DHL and BAX Global have smaller
facilities at the airport. More than $200 million has been invested in infrastructure
improvements and facilities over the last few years. This development has helped
facilitate employment transition to service distribution. However, these jobs, while
critical to the area, traditionally do not offer the income level that is on par with lost
manufacturing jobs.




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The City of Rockford needs to create more opportunities for residents to not only
live in Rockford but to work in Rockford as well. New convention/conference
centers and hotels not only hire people from the local area to operate these facilities
but provide hundreds of associated construction jobs during development.

Colleges and Universities

As many workers look to redirect their careers, higher education will play an
increasingly important role in the economy of northern Illinois. The main
institutions of higher learning within 60 miles of the Rockford area have a combined
enrollment of more than 51,000 students. Table 3-6 lists the nine colleges and
universities in the area.

                                                   Table 3-6
                                      Local Academic Institutions*
                Institution                                          City        Enrollment
                Northern Illinois University                      DeKalb, IL        18,816
                Rock Valley College                              Rockford, IL       15,340
                University of Wisconsin - Whitewater            Whitewater, WI       9,210
                Edgewood College                                 Madison, WI         1,989
                Aurora University                                 Aurora, IL         1,974
                Beloit College                                    Beloit, WI         1,407
                Judson University                                  Elgin, IL         1,180
                Rockford College                                 Rockford, IL          880
                Rasmussen College                                Rockford, IL          375
                Upper Iowa University                            Rockford, IL          100
                Benedictine University                           Rockford, IL            -
                Embry Riddle Aeronautical University             Rockford, IL            -
                    Total Enrollment                                                51,271
                * Within 60 Miles of City of Rockford
                Source: US News, Respective Facilities, Johnson Consulting



The largest school is the Northern Illinois University with 18,816 students, followed
by Rock Valley College, located in Rockford, with 15,340 students.

Transportation and Development

The decision to locate Interstate 90 east of downtown Rockford is having multi-
generational impacts on the development patterns in Rockford. The combination of
interchanges along I-90 has actually driven commercial and residential
development out of the downtown area and into the areas along the interstate. This
pattern has hurt the development of the downtown area, as most hotels are situated
on the I-90 corridor and away from central downtown.




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If development patterns to the north, northwest, and west of Chicago over the past
quarter century are an effective guide, then the Chicago metro area will continue to
expand toward Rockford. During this period of time, formerly rural and agrarian
areas of DuPage, Kane, Lake, and, more recently, Boone County have been
developed for residential and commercial purposes. As the expansion of the
Chicago market has moved northwest along I-90, the interaction of Rockford with
communities such as Elgin and Huntley has changed dramatically. Where Rockford
was once a clearly independent market, movement today between these
communities has become more fluid as commuters and residents move back and
forth for jobs or in search of more affordable housing. Given the continued
economic success of the Chicago suburban marketplace, Rockford should continue
to envision itself as the area’s cultural center and specialty shopping locale. Its
strategies should work to capture this associated economic activity.

Hotel, Meeting, and Retail Offerings

The City of Rockford’s lodging market is comprised of approximately 2,643 rooms.
The predominant property type in the market is ‘limited service’ properties, which
compete for business based on price rather than through amenities such as meeting
space and food service. Table 3-7 shows the hotel market in Rockford along with
any meeting space that is part of the hotel.




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                                                      Table 3-7
                                                   Rockford Hotels
                                                                                       Meeting
                                                                              # of
                                              Name                                      Space
                                                                             Rooms
                                                                                       (sq. ft.)
      Alpine Inn                                                                 105               -
      Baymont Inn and Suites                                                      87               -
      Best Western Clock Tower Resort                                            245          -
      Candlewood Suites                                                           67          -
      Cliffbreakers River Suites, Conference Center & Riverview Restaurant       104     25,000
      Clock Tower Resort & Conference Center                                     247     30,000
      Comfort Inn                                                                 64          -
      Courtyard by Marriott                                                      147      1,000
      Extended Stay America                                                      104          -
      Fairfield Inn & Suites                                                     106          -
      Hampton Inn                                                                121          -
      Hilton Garden Inn                                                          135       3900
      Holiday Inn of Rockford                                                    202      4,022
      Howard Johnson Hotel                                                       102       2400
      Lexington Cliffbreakers Riverside Resort                                   103          -
      Motel 6                                                                    131          -
      Quality Suites of Rockford                                                  95      1,166
      Radisson Hotel & Conference Center                                         114     10,000
      Ramada Inn                                                                 159     10,000
      Red Roof Inn                                                               108          -
      Residence Inn by Marriott                                                   94        550
      Sleep Inn                                                                   70        700
      Staybridge Suites                                                           86
      Studio Plus                                                                 73           -
      Super 8 Motel                                                               50           -
      Sweden House Lodge                                                          95       1,300
      Travelodge Rockford                                                         84
        Total                                                                  3,098     90,038

                                     Winnebago County, non Rockford
      Best Western Legacy Inn & Suites                                            67               -
      Days Inn Rockford                                                           98               -
      Holiday Inn Express & Suites Rockford Loves Park                           119               -
      Knights Inn South Beloit                                                    37               -
      Quality Inn & Suites Loves Park                                             55               -
      South Beloit Inn                                                           159               -
       Total                                                                     535

          Total Rockford & Winnebago County                                    3,633
      1
       Does not include bed and breakfast lodging
      Source: Rockford Area Convention & Visitors Bureau




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As the table shows, the largest hotel in the area is the 247-room Clock Tower Resort
& Conference Center. This property also contains the most meeting space of any
hotel in the Rockford area, followed by Cliffbreakers. In both instances, the
properties have been successful in cultivating meetings business for smaller events.
The business model, however, does not attract the size of events that drive business
for multiple hotel properties.
In addition to the meeting space at the hotels listed above, the community of
Rockford also has several other facilities which offer meeting and event space. The
largest of which are found at the MetroCentre and the Hononegah Dome. Table 3-8,
below, provides an assessment of total community meeting space in Rockford.

                                                   Table 3-8
                          Current Total Rockford Meeting Space Supply

                                                                        Meeting Space
                                        Name
                                                                           (sq. ft.)

 Total Hotel Meeting Space                                                        90,038
 Forest Hills Lodge                                                               10,000
 Giovanni's Banquet Center                                                        13,000
 Hononegah Dome                                                                   59,400
 Mendelssohn Performing Arts Center                                                3,200
 Klehm Arboretum                                                                   5,780
 MetroCentre                                                                      33,000
 NIU Rockford                                                                      3,000
 Tebala Shrine Center                                                              9,260
 Winnebago County Fairgrounds                                                      5,808
 Total                                                                          232,486
 Source: Rockford Area Convention & Visitors Bureau


The Rockford area has approximately 232,486 square feet of meeting space but at
numerous locations which inhibits the total number of people able to gather in one
place. Rockford is at competitive disadvantage to communities such as Peoria,
Schaumburg, and Springfield, which have dedicated exhibition space or hotel
properties with high volumes of meeting space. Based on its current hotel supply
and because Rockford does not have a larger, permanent exhibition or meeting
facility, the area is not able to attract conventions or tradeshows that require
multiple hotel properties. As a result, state association meetings or tradeshows that
would be a natural fit for this market bypass Rockford in favor of destinations that
have invested in dedicated, high-quality exhibition or meeting facilities.
Hotel development in Rockford has centered on the I-90 interchanges. Based on this
location, which is approximately six miles from downtown Rockford, these




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properties have been developed to capture transient interstate traffic and resultantly
capture commercial and group business as well.
In addition, while many of the properties listed above also feature meeting space,
there is not a single facility in the market that offers the combination of modern,
high quality, technologically advanced meeting space and itinerant pre-function or
banquet capacity. It is precisely this issue that has resulted in limited penetration
into the meetings and conferences market.

Implications

Through sustained and thoughtful initiatives and investment in projects such as a
new convention/conference center and hotel, downtown Rockford can have a
revitalized identity and re-emerge as an economic center and resource for the
community. The realization of this potential will require targeted and continued
investment in the downtown area. As this occurs, the area will develop a regional
and national identity (in certain niches) as a destination for conventions,
conferences, and other events, and endow downtown Rockford with a new sense of
energy and vitality.

The number of current initiatives underway (or at least being studied) provides
strong emphasis on the high level of interest in the redevelopment of downtown
Rockford. The interest in downtown redevelopment is present but financial
considerations for such projects need to be carefully considered and weighed
against long-term economic benefits to the community. The scale and nature of
projects that are required to shift the pendulum towards redevelopment of the
downtown area is a fairly large undertaking. They require core infrastructure
developments that repeatedly invite visitors into the area, encourage them to
circulate after events, and contribute to the enrichment of the community’s quality
of life.

Despite this progress demonstrated by recent capital construction projects (museum
expansion, federal courthouse, MetroCentre renovations), however, downtown
Rockford is plagued by an unclear identity and distinct absence of vitality in certain
areas. While new projects such as the development of a new federal courthouse will
contribute to the ongoing, incremental progress, if downtown is truly going to
emerge, more immediate and more clearly targeted steps must be taken. The
Coronado Theatre, Davis Park, and the MetroCentre provide a potential foundation
on which to build, but large-scale investment and ancillary development needs
must be combined under a common vision. Further, since downtown remains
disconnected from the I-90 corridor, Rockford will need to develop more effective
connections to its outlying urban and suburban areas to be a successful destination.




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MEETINGS MARKET INDUSTRY TRENDS

In order to understand the feasibility of a new convention/conference center and
hotel facility in Rockford, an analysis of entertainment, social event and meeting
industry trends is important. The Rockford market is changing. The increase in arts
and entertainment offerings, the riverfront redevelopment effort, and other positive
changes will increase the attractiveness of downtown Rockford as a meeting
destination.

This section will provide a general overview of the types of meeting facilities that
exist in the industry as well as the types of events that are commonly hosted. Also
discussed are the seasonality of certain types of events and the general requirements
that meeting planners look for in a prospective location.

Types of Facilities

The diverse needs of various types of events have led to the emergence of a
spectrum of facility types designed to attract potential tenants. This section
describes the major features of various types of public assembly facilities.

Each event type has unique facility needs. Certain events require large amounts of
contiguous space, while others require many smaller meeting rooms. Often a single
meeting will use many different types of spaces, such as large exhibit halls, banquet
facilities, breakout meeting rooms, and theater seating.

         Hotel and Meeting Room Facilities - To help lure hotels and to subsidize
         their operations, many markets have developed a multipurpose or smaller
         convention/conference center complex by participating in public-private
         partnerships. The public sector may assemble land, build parking, and fund
         meeting space components as a way to execute such a project. These types of
         projects have been completed in markets of various sizes. Often, they are
         built as a joint project, but some markets have built the public elements first,
         with a hotel coming in later.

         Conference Center - Conference centers provide a combination of meeting
         spaces, high-tech amenities, and services in support of training and
         education initiatives. Most conference centers are operated in conjunction
         with a hotel, although some are part of a university and a few operate as
         stand-alone venues.




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         Convention Center - On a larger scale, convention centers combine the
         meeting capabilities of a conference center with exhibit space. These facilities
         are designed to meet the broad needs of the Meetings, Incentive,
         Convention, and Exhibition (M.I.C.E.) market and primarily serve as
         enterprises for the community. Their mission is to bring outside visitors and
         associated spending into the community, although they may also host large
         consumer events. Usually, there is one primary facility in a market, designed
         to spawn hotel and retail development in an area.

         Exposition Hall - Pure exposition halls generally occur in markets that have
         other convention and meeting venues available or in cases where cities have
         failed to develop facilities and the private sector responds with an
         inexpensive facility. These facilities focus exclusively on product and
         consumer shows that require little meeting space.

         Trademart - Trademarts typically combine an exhibit facility, permanent
         display space, and specialized office space. These facilities provide space for
         the wholesale distribution of products in certain industries, such as
         furniture, clothing, sporting goods, and computers. Trademarts typically
         have permanent display facilities, occupied by various businesses under
         long-term leases. Many trademarts also have large exhibition halls that serve
         temporary exhibitions, tradeshows, and consumer shows. These facilities are
         located in large cities that serve as regional marketing and wholesale centers.

         Fairgrounds - Fairgrounds combine a number of assembly and exposition
         elements on a large campus. They may include one or more exposition halls,
         with the physical characteristics of exposition centers. They may also offer
         exhibition centers, parks, arenas, or other elements. Located away from
         downtown areas, fairgrounds provide acres of parking for large events. The
         facilities usually have little meeting space, but other arena and meeting hall
         functions may occur on the property.

         Events Center – Events centers are used as a multipurpose facility and host a
         wide range of events, from small to mid-size conventions, trade shows,
         sporting events, concerts, banquets and many other types of events. Events
         centers are very versatile and offer communities a less expensive option
         compared to larger, more cost-intensive convention centers. Events centers
         also incorporate breakout/meeting rooms, and often have a full commercial
         kitchen to host and cater banquet events. By locating a conference center and
         hotel next to the MetroCentre, the entire complex is more diversified and
         flexible and both ventures can work in concert with each other to attract
         unique events that neither could attract individually.




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Types of Function Space

The various event types and their diverse needs require public assembly facilities to
offer a variety of function space, of varying sizes and finishes as described below.

         Exhibition Space – This flexible space is intended to be the heart of the
         convention center dedicated to hosting conventions, tradeshows, consumer
         shows, and other events that require large amounts of uninterrupted space.
         Typically, exhibition space is not carpeted, does not have a high level of
         finish, but does provide convenient access to utilities for each exhibitor.
         Exhibition halls typically range in size from 20,000 square feet, on the
         smaller side, to over one million-plus square feet in some cases. In most
         exhibit halls, the space can be subdivided into smaller spaces, usually in 1/3
         increments.

         The basic layout of the hall follows a 30-foot by 30-foot grid derived from a
         10-foot by 10-foot booth, the building block of the convention and trade
         show industry. The booth-aisle-booth module may be arranged along either
         axis, depending on the particular event’s organization or preference for flow.
         Column-free exhibition halls are not mandatory but are perceived as more
         desirable to meeting planners. If columns are used, their location can
         sometimes be more critical than spacing. The proposed depth for the hall is
         210 feet. Lateral-column spacing typically conforms to the 30-foot structural
         grid. If columns are used, maintain 90-foot square minimum-column spacing
         or a multiple of 30 feet.

         Ballroom Space – The ballroom is a large, column-free space that should be
         divisible into at least three sections. Its features include a finished ceiling, a
         mixture of lighting types including fluorescent, incandescent and specialty
         lighting for architectural features and special events as well as a high quality
         carpet. Clear height to ceiling obstructions should be 30 feet.

         For general sessions or banquet presentations, lighting must have flexible
         circuiting and dimming controls zoned to the room divisions. The recent
         industry trend has been to use the ballroom for more theatrical presentations,
         resulting in an increased need for rigging capacity and electrical power for
         stage production lighting and sound systems.

         Each room division should have support for head-table locations. Typically,
         these will occur once in each individual room break and at either of two walls
         when the room is used in the full-open condition. Special features to occur at
         each location include:
                   −     Microphone jacks.




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                   −     Individual light circuit for featuring key speakers or dimming for
                         A/V use.
                   −     Track lighting.
                   −     Overhead speakers wired to a kill switch to reduce feedback.

         Meeting Rooms – Groups of meeting rooms should be distributed throughout
         the facility. Meeting rooms are generally subdivided with movable partitions
         at 30 feet on center, with the minimum room division being a 30 ft. x 60 ft.
         module using a 30-foot structural grid. All divisible meeting rooms must
         have a 16-foot-minimum ceiling height to accommodate the use of
         audiovisual projectors. Larger meeting rooms should increase the ceiling
         heights proportionally.

         Each meeting room typically will have preprogrammed lighting scenes, access
         to cable television hook-up, and access to nearby storage areas for stackable
         seating and tables. The rooms should be carpeted and have coffered ceilings
         with incandescent fixtures for low-lighting levels and a combination of
         incandescent and fluorescent cove lighting to be used for general illumination.

Industry Trends

This sub-section provides an analysis of the meetings industry and its general size
and character as it relates to Rockford and the surrounding region, as well as a
description of general industry trends.

The Meetings and Flat-Floor Exhibit Industry

The meetings industry has developed into a varied group of events ranging from
large trade and exhibition events to small business conferences. As societies mature
and become more sophisticated, so does the meetings market. The diverse nature of
the meetings industry and the characteristics of various event types necessitate a
variety of alternative facilities. Virtually all categories of meeting activities have
experienced rapid worldwide growth since the early 1970s. The pursuit of
education and commerce has fueled the development of new events and the
expansion of existing events in both size and attendance. Cities throughout the
world have responded and are still responding to this demand by supplying
millions of square feet of new or renovated exhibition and meeting space in both
small and large markets.




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Event Sponsors

The meetings industry includes a wide variety of event types that are sponsored by
different types of businesses and organizations, including the following:

         Corporations - business meetings are an integral part of the meetings
         industry. They represent the majority of meetings held throughout the
         world, and topics can be as wide-ranging as the industries themselves. For
         the purposes of this report, corporate meetings will refer to off-site
         conferences, sales, and incentive meetings, such as the events that are often
         held at hotels.

         Associations - trade and business associations represent certain industries
         and strive to keep members current on issues related to their industry.
         Associations sponsor meetings and conventions to serve this educational
         and informational purpose. Associations also assist in marketing efforts by
         holding trade shows where members can show and sell their products.

         Educational Institutions - increasingly, universities are recognizing that
         more continuing education occurs at meetings than in a classroom setting.
         As educational institutions sponsor more of these continuing education
         activities, academia is becoming increasingly aware of its need to develop
         and sponsor conferences.

         Government - all levels of government hold meetings for the purpose of
         education, issue discussion, and policy deliberation. In many countries,
         governments also create and sponsor trade shows in order to support sectors
         of the economy.

         Independent Show Organizers, Incentive Houses, and Publishing Companies
         - the meetings industry has grown so large that it now supports a growing
         number of organizations in the business of producing meeting events. These
         businesses may work for corporations and associations handling all aspects
         of a meeting from booking attendees to event operations. Many publishing
         companies have trade show and convention management divisions.
         Incentive houses not only work for their corporate and association clientele,
         but they may also create programs and conferences as moneymaking
         ventures.

         Social, Military, Education, Religious, Fraternal and Ethnic (SMERFE)
         Organizations - these organizations typically sponsor convention or
         assembly events. The SMERFE events are typically not business-related and
         tend to be more for social gathering and issue discussion.




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Table 4-1 summarizes the key attributes of various types of meetings, and shows the
existing capacity to meet these needs in the Rockford area.

                                                                    Table 4-1
                                            Meeting Types and Related Facility Requirements

                                  Attendance                                 Major Facility                                Rockford's Current
 Meeting Type                                        Primary Purpose                              Typical Facility Used
                                    Range                                    Requirement                                    Capacity to Host


                                                       Training and                               Hotels; Conference
 Corporate & Other                                                           Meeting space
                                 Less than 100          information                               Centers; Convention           Average
 Meetings                                                                      (minimal)
                                                         exchange                                Center Meeting Rooms
                                                                                                  Hotels; Conference
                                                        Information        Meeting space and
 Conferences                       50 to 2,000                                                    Centers; Convention        Below Average
                                                         exchange           banquet space
                                                                                                 Center Meeting Rooms
                                                                                                  Hotels; Conference
                                                        Information        Meeting space and
 Conventions                      500 to 5,000                                                    Centers; Convention            Poor
                                                         exchange           banquet space
                                                                                                       Centers

                                                        Information       Exhibition, breakout
 Conventions with
                                2,000 to 20,000        exchange and       meeting space, and       Convention Centers            None
 Exhibits
                                                           sales            banquet space

                                                                              Exhibition and
                                                                            breakout meeting       Convention Centers;
 Tradeshows                     2,000 to 50,000            Sales                                                                 None
                                                                             space for some      Trademarts; Fairgrounds
                                                                                 events

                                                      Advertising and                              Convention Centers;
 Consumer Shows                10,000 to 150,000                            Exhibition Space                                 Below Average
                                                          sales                                  Trademarts; Fairgrounds


                                                      Advertising and                              Convention Centers;
 Combination Shows*            10,000 to 150,000                            Exhibition Space                                 Below Average
                                                          sales                                  Trademarts; Fairgrounds

                                                                             Stage, seating,      Convention Centers;
                                                        Information
 Assemblies                     5,000 to 50,000                             breakout meeting       Arenas; Stadiums;         Below Average
                                                         exchange
                                                                                 rooms                Fairgrounds

 *A tradeshow with private access is followed by a consumer show with public access.
 Source: Johnson Consulting




As the table shows, Rockford is poorly positioned in virtually every category of use.
While facilities such as Cliffbreakers and the Clock Tower provide some capacity,
there is not an appropriately designed facility in Rockford or in close proximity
with the capacity to host medium-sized tradeshows or consumer shows, outside of
the MetroCentre. Additionally, Rockford also has a limited ability to host large
assemblies such as conventions, school or military reunions or religious festivals.
This issue has been impacting the efforts of the RACVB to attract conventions and
other events that would use such a facility.


Event Types

The following points discuss various event types:




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         Temporary Expositions and Trade Shows - are events designed to bring
         buyers and sellers of industry-specific products together. Most trade show
         events are not open to the public; however, in Europe, the public can
         sometimes attend trade events. Tradeshows usually cater to a specific
         industry. However, multi-industry “trade fairs” also occur. The event
         programs run for a period of three to six days with equal or slightly less time
         required to set up and tear down the event booths. Exhibitors prefer column-
         free, single-story, open-space facilities to construct custom, temporary
         booths to display their products. Temporary exposition events are increasing
         the number of meetings held during the exhibition and as a result, becoming
         more like conventions with exhibits. However, in comparison to conventions
         with exhibits, temporary expositions tend to maintain higher attendance
         figures, but a shorter average length of stay for attendees.

         Figure 4-1 displays the most frequent event categories for conventions with
         exhibits and trade shows.

                                                        Figure 4-1
                      Top Event Categories - Conventions with Exhibits and Trade Shows

                  Aerospace & Aviation                          Home & Garden Furnishings & Supplies
                  Agriculture & Farming                         Libraries
                  Apparel & Fashion                             Manufacturing & Industrial
                  Art & Architecture                            Medical & Health Care
                  Associations                                  Military
                  Building & Construction                       Ocean Supplies & Equipment
                  Business & Finance                            Police & Fire Fighters
                  Chemicals                                     Printing & Graphics
                  Communications                                Radio, TV & Cable
                  Computers & Computer Applications             Religious
                  Education                                     Safety & Security
                  Electrical & Electronics                      Sanitation & Waste Management
                  Energy & Mining                               Science
                  Facilities, Engineering & Maintenance         Stores & Store Fittings
                  Food & Beverage                               Textiles
                  Forest Products                               Transportation
                  Funeral Industry                              Travel Industry
                  Government                                    Veterinary

                  Source: Trade Show Week Data Book



         Rockford could host events from the categories in the preceding Figure (4-1)
         by attracting events that rotate around the region and nationally and by
         facilitating the development of new events that will form to take advantage
         of the opportunity the new facility provides.




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         Like conventions, trade shows offer a forum for exchanging industry ideas.
         They differ from conventions, however, because they are more product-and
         sales-oriented. Trade shows are exhibit-intensive, and exhibitors prefer
         column-free, single-story, open-space facilities in which they construct
         temporary custom booths for product display. Trade shows typically attract
         a large number of attendees, who originate from outside the host city but
         tend to have a shorter average stay than convention attendees. Therefore,
         individual attendees may have less impact on the host city’s economy.
         Meeting programming is increasing as trade shows attempt to educate
         buyers about products.

         Permanent Expositions - Permanent expositions are designed to promote
         commerce by establishing permanent exhibit areas for manufacturers.
         Although these facilities cater primarily to business, the general public is
         usually allowed to enter. Show promoters, however, discourage public
         attendance, as the primary intent of the exhibition is to promote wholesale
         trade. Permanent expositions use three types of product promotions:
         −    Sample Showcases - are small advertising displays of various new
              products. While company representatives do not staff the permanent
              facility of the showcase, personnel are usually available to provide
              buyers with information regarding the companies and their products.
         −    Export Marts - are facilities with staffed booths displaying domestic
              manufactured products. Export marts are typically arranged by
              industries and are meant to be one-stop-shops for prospective domestic
              and international buyers. The display areas are typically 200 to 600
              square feet in size and are staffed with three to five people. In industries
              such as fashion, where seasonal sales patterns occur, booths are only
              staffed during peak sales periods, despite the fact that annual rents are
              collected for the space.
         −    Import Marts - are used by foreign manufacturers to display their
              products to domestic buyers. Like export marts, they are typically
              arranged by industries, are 200 to 600 square feet in size, and are
              sometimes staffed only during buying seasons. Often, trade associations
              representing mart tenants sponsor temporary expositions, thereby
              creating a regional draw for the mart. If significant exposition space is
              provided, these events can become the dominant industry event in the
              country or region.

         Consumer Shows - are public, ticketed events featuring exhibitions of
         merchandise. Examples of this type of show include clothing, food, and
         antique shows. These events occur in public assembly facilities such as
         hotels, convention/ conference centers, and exposition centers. They




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         normally attract large numbers of attendees. Depending upon the size,
         location, and type of merchandise being displayed, consumer shows
         normally attract local residents.

         Figure 4-2 displays a summary of the most prevalent types of consumer
         shows.

                                                   Figure 4-2
                                Top Event Categories - Consumer Shows

                            Antique                       Jewelry & Gem
                            Art                           Jobs, Career & College
                            Auto                          Motorcycle
                            Boat                          Outdoor Sports
                            Computer                      Pets
                            Ethnic                        RV & Camping
                            Film                          Sewing & Needlework
                            Flower                        Sporting Goods & Guns
                            Gift & Craft                  Super Sale
                            Golf                          Toys & Hobbies
                            Health & Beauty               Travel
                            Holiday                       Weddings
                            Home & Garden                 Woodworking

                            Source: Johnson Consulting



         This list displays traditional consumer show events, but does not include the
         growing subset of specialty fairs, festivals, and agricultural events. If local
         demand is determined to exist, these events could also potentially be held in
         a new facility in Rockford.

         Conventions or Congresses - are privately held meetings of professional
         groups and associations that commonly take place in hotels, convention/
         conference centers, or civic centers. Association members and/or affiliates
         wishing to meet similar professionals and share ideas attend these meetings.
         The convention can consist of a single meeting or a number of concurrent
         meetings during the event period. Conventions are increasingly featuring
         exhibits to communicate ideas and are known as “conventions with
         exhibits.” Conventions are generally “high-impact” events since attendees
         normally stay several nights in the host city, generating hotel room nights. In
         addition to hotel expenditures, attendees purchase other goods and services
         while in the city such as food and beverage, souvenirs, and transportation.
         The term “convention” is generally used in North America, and “congress”
         is used in Europe, and sometimes in Asia, to describe the same type of
         events. However, conventions typically use more exposition space and have




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         a more social nature than congresses, but this distinction is narrowing.
         Congresses are becoming more like North American-style conventions.

         Assemblies - are largely association, fraternal, or religious events that require
         a large plenary hall, arena, or stadium for their gatherings. Similar to
         conventions, they are characterized by large numbers of attendees
         originating from outside the host city.

         Conferences - are smaller convention-type events typically held in meeting
         rooms and ballrooms or in formal conference centers. Like conventions and
         congresses, they are often sponsored by associations and corporations and
         address current issues and information. Attendees and users typically
         demand high-quality facilities and most originate from out of town.

         Incentive Meetings - The corporate market uses incentive meetings as a way
         to reward employees, combine recreation and business meetings, or to mix
         employees and clients in a business and recreational setting. Product
         launches, key account conferences, and award events are all-important
         aspects of this meeting sector.

         Entertainment Events - such as the performing arts, concerts, sporting
         events, and circuses can be accommodated by a variety of facilities.
         Typically, these facilities are dedicated to specific uses. However,
         multipurpose facilities, such as convention/conference centers, can
         accommodate a large variety of events, especially if they are designed
         appropriately. Event promoters require unobstructed space to arrange the
         performance and from which attendees can watch the event.

In our assessment, the convention, conference, social, entertainment, consumer
show, trade show, and SMERFE markets have relevance and are important to the
success of a new facility in Rockford.

Meeting Planner Selection Criteria

The American Society of Association Executives (ASAE) surveyed its members
regarding their criteria for selecting a convention/conference center destination.
These executives were responsible for selecting the destination for a variety of
events, from small meetings to large exhibitions. While the meeting planners are
U.S. based, the survey will provide insight as to major selection factors which are
very similar and transcend national borders. Figure 4-3 illustrates the average
responses of members who placed events in convention/ conference centers.




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                                                         Figure 4-3



                                         Convention Center
                                       Site Selection Criteria*


                 Meeting room facilities

                      Quality of service

                    Overall affordability

             Number of sleeping rooms

                        Exhibit facilities

       Membership appeal (city image)

           Geographic rotation policies

                   Dining/entertainment

                    Driving accessibility

               Facilities for the disabled

                                 Climate

                  Union/labor problems

                 Existence of bed taxes

                                             1.0   1.5     2.0   2.5   3.0   3.5   4.0   4.5   5.0

                                           Not                                                Very
                                        Important                                          Important
      *Average rating of each criteria by planners of convention center events on a scale of one
       to five, with five being very important and one being unimportant.
       Source: American Society of Association Executives Meeting Trends Study




ASAE’s survey respondents gave a high level of importance to 1) the availability of
meeting room facilities, 2) quality of service, 3) overall affordability, 4) the number
of available sleeping rooms, and 5) the availability of exhibit facilities. As developer,
you can control all but the affordability factor listed above. Meeting planners
considered climate, union/labor problems, and the existence of bed taxes as less
important criteria.




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Event Attributes

Distribution by Number of Attendees

An important element to consider in terms of the appropriate size and scope of
meeting facilities is the size distribution (number of attendees) of the events it will
pursue. Analysis of the distribution of international meeting events by number of
attendees reveals a trend towards smaller events. This finding is consistent with a
movement towards smaller events in the worldwide convention, exhibition, and
meeting industries. Figure 4-4 displays the distribution of international meeting
events by number of attendees.

                                                   Figure 4-4

                                         International Meetings
                                        Segmented by Number of
                                          Attendees per Event
                                                     3000 +
                                      1001 to
                                                      4.5%      < 100
                                       3000
                                                                13.1%
                                       9.5%


                                  501 to
                                   1000
                                  15.4%



                                                                100 to 500
                                                                  57.5%

                              Source: UIA



The majority of international meeting events (57.5 percent) are in the 100-to-500
attendee range, which is the target market for a potential facility in Rockford. Very
few of these meeting events have over 3,000 attendees (4.5 percent), while 86
percent have 1,000 or fewer attendees.

Seasonality

Meetings occur throughout the year. However, just as the number of people taking
vacations displays distinct seasonal patterns, the level of meeting activity varies
from month to month. Figure 4-5 displays the distribution of international meeting
events by month.




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                                                    Figure 4-5

                               International Meeting Events by Month

                                                    Dec. Jan. Feb.
                                          Nov.      4% 3% 4%
                                                                   Mar.
                                          10%
                                                                   7%

                                                                          Apr.
                                  Oct.                                    7%
                                  12%


                                                                           May
                                                                           11%

                                  Sept.
                                  16%
                                                                   Jun.
                                             Aug.                  12%
                                                         July
                                             7%
                        Source: UIA                      7%



The busiest months for meeting events are September, June, October, May, and
November, with approximately 60 percent of events. The two busiest individual
months are September and October. The slowest months are February, December,
and January.

Length

The average length of events recorded by Union of International Associations (UIA)
is four days. The trend in meeting events is to concentrate activities into a shorter
period of time. However, the UIA’s criterion of a minimum of three days causes it to
exclude a growing number of shorter meeting events from its analysis.

Purpose of Events

Most countries have a variety of national associations, some of which may be linked
to international bodies, while others may be independent. In addition, a variety of
economic and social activities generate smaller regional or local meetings.
Corporate activity is responsible for a large share of overall meeting events.
Demand related to corporate activity is often generated in the local region.
However, cities and regions which are particularly attractive as destinations can
attract meeting attendees from a much broader area due to their high level of
appeal. Such meetings range from training seminars to product introductions to




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incentive travel. Figure 4-6 displays the distribution of corporate meeting types by
purpose of meeting.

                                                   Figure 4-6

                             Purpose of Meeting Events by Attendance
                                              Other
                                              10%                       Training
                                                                        Seminars
                                Stockholder
                                                                          23%
                                    1%

                    Incentive Trips
                         18%




                                                                                   Prof. / Tech.
                   Product Intros.                                                     10%
                        6%


                               Mangmt.
                                10%                             Sales
                                                                22%
                    Source: Tradeshow Week



Training seminars, sales meetings, and incentive trips account for the largest
percentages of overall meeting attendees. The meeting industry is diversified, with
no single meeting type accounting for over 25 percent of overall attendees, and
seven distinct categories of meetings all contributing significant volumes of
attendees. This diversification helps to stabilize overall event demand, as the
demand from each individual sub-sector of meeting events ebbs and flows with
changes in business cycles and technology.

Overlaying and adding to this are the university training and conference sectors.
There are hundreds of conference centers nationally that are affiliated with four
year and community college institutions. They host some of the above events, but
also create a huge volume of business in their own right.

Implications and Opportunity for Rockford

In recent years, the growth rate in demand for exhibition space has been exceeding
the rate of increase in the supply of exhibition space. Primary and secondary
population centers throughout the country have added dedicated meeting facilities
to meet the increasing demand. In the case of Rockford, the success of a potential




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convention/ conference center will be deeply rooted in the planning and
positioning of a facility:
         The trends and data detailed above point to long-term growth for regional
         exhibition facilities that are effective in carving out a market niche. As a
         community that has not cultivated an identity as a convention/tradeshow
         destination, Rockford will need to be aggressive in defining its industry
         niche, and cultivating a market.
         The importance of facility amenities, service quality, and overall
         affordability were all scored as motivating factors for meeting planners
         when deciding on a location for an event. As Rockford has already
         demonstrated to be an affordable market, it should leverage this fact. When
         it comes to facility amenities and service quality, Rockford will have the
         ability to design the facility to meet the needs of its target markets, which
         should enable the facility to distinguish itself from its peers.
         Except for a legacy of older buildings and the Rock River, downtown
         Rockford has no clear image and no hotel rooms. While the long-term
         success of this area could be buoyed by a convention/conference center, a
         center will not be successful unless hotel rooms and entertainment options
         are developed concurrently. In addition, visibility and transportation access
         to this area will present considerable challenges. The potential downtown
         whitewater park, mixed-use development and sports complex are very
         synergistic with a new convention/ conference center and hotel.
         Conversely, the East State Street/I-90 corridor is easily accessible and
         already has an existing hotel room inventory of just fewer than 2,200 rooms
         as well as dining options. This will make a convention/ conference center
         more cost-effective to develop in the short-term, but the detraction of this
         area is the relative lack of entertainment options that are unique to the
         Rockford area and the community’s desire to redevelop the historic
         downtown area.
The market analysis in Section 3 indicates that there is an appeal and need for
Rockford to offer a convention/ conference center facility. This need was supported
by interviews with Midwestern meeting planners and tradeshow promoters. The
facility should serve as a regional venue for northern Illinois, and serve the
meetings market, local businesses and cultural, sports and entertainment sectors, as
well as targeting rotating conventions and tradeshows.
In order to develop an identity as a location for convention, tradeshow, and meeting
activity, Rockford will not only need to invest in a facility that signals its
commitment to attracting these activities, it will also need to ensure that it is
effectively positioned in relation to its regional and national peers. Section 5 of this
report will provide comparison and analysis of the selected comparable facilities.




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ANALYSIS OF EXAMPLE FACILITIES

To gauge the potential success of a new convention/conference center in Rockford,
Illinois, Johnson Consulting interviewed several key groups, and analyzed a variety
of comparable facilities. The facilities profiled highlight the experience of
communities that have built new convention/conference facilities with an
associated hotel to spur economic development. The facilities were chosen for
similarities in demographic and market characteristics, as well as a variety of other
factors. As a rule, the bigger the meeting complex, the greater the public funding
required for the venue. As such, a smaller facility as advocated by community
leadership should be a more practical way to enter the market for the community.
In all cases, these types of projects are used to build and diversify demand either for
a market as a whole or for a specific subarea of a community.

This information will provide the basis of the demand and operating projections
presented in Section 6 of this report and help to form an understanding of the right
approach for selecting a facility size and funding method.

Comparable Facilities

Information about the event demand and financial performance of these potentially
similar facilities provides insight into the general parameters within which the
proposed convention/ conference facility in Rockford can reasonably expect to
operate.

It typically takes three to five years for a new facility to stabilize its operations. This
reflects the time required for a new facility to get into the sales cycle in the
convention and meetings industry (18 months to five years), the need of direct
market and support organizations such as a Convention & Visitors Bureau (CVB) to
become more sophisticated in their event targeting and sales functions, and the
maturity required within the overall market to identify opportunities to create or
grow events. A new facility in Rockford would have the benefit of a well-
established and well-operated CVB so the time it takes could be on the shorter side
of entering the sales cycle.

The following pages provide case-study analysis of several convention/conference
center facilities that share either market or venue characteristics to the situation in
Rockford. The facilities are:

         Schaumburg Convention Center and Rennissance Hotel, Schaumburg,
         Illinois;




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         Bayfront Convention Center and Sheraton Hotel, Erie, Pennsylvania;
         St. Charles Convention Center and Embassy Suites Hotel, St. Charles,
         Missouri;
         Grand Wayne Convention Center and Hilton Hotel, Ft. Wayne, Indiana;
         Three Rivers Convention Center, Kennewick, Washington;
         South San Francisco Conference Center, South San Francisco, California; and
         Peoria Civic Centre, Peoria, Illinois.

Schaumburg Convention Center, Schaumburg, Illinois

Similar to Rockford, the City of Schaumburg had been trying to develop a
convention center since the mid 1980s. For a large portion of this time, Schaumburg
was working with four other municipalities under an intergovernmental agreement
that, combined with State of Illinois authorizing legislation, created the Illinois
International Convention Center Authority. This format was not successful and
Schaumburg determined that it would develop the project as an individual
municipality. The goals of the project were to create additional economic activity in
Schaumburg that would serve as an economic engine and grow tax revenues.

The Schaumburg Convention Center (SCC) is located adjacent to Interstate 90 in the
heart of the Woodfield regional center, and is within a 30-minute drive from
Chicago’s O’Hare International Airport, and 45 minutes from downtown Chicago.
The 45-acre site was purchased in 2000 for $13 million. The facility is owned by the
City of Schaumburg, operated by Marriott HOST management and is connected to a
474-room Renaissance hotel. This new facility was built since the prior study for the
City of Rockford’s convention center. Its evolution was a primary reason why the
RACVB elected to advocate a smaller, downtown venue rather than a larger venue
in the I-90 area.

Figure 5-1 shows the floor plans of the Schaumburg Convention Center facility.




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                                                  Figure 5-1




The SCC contains an array of function and pre-function spaces. Table 5-1, following,
profiles all of the meeting and function space at the Schaumburg.




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                                                     Table 5-1
                                     Schaumburg Convention Center
                                   Summary of Exhibit and Meeting Space
                                                     Size (SF)               Capacity (# of Persons)
                                            Individual     Combined
                                                                          Theater   Classroom   Banquet
                                            (Smallest)     (Largest)

     Exhibit Hall
     Schaumburg Convention Center                   -            97,200     6,300      4,800       5,100
     Adventure Hall                            32,670                 -     2,100      1,600       1,700
     Discovery Hall                            32,400                 -     2,100      1,600       1,750
     Exploration Hall                          32,130                 -     2,100      1,600       1,700
         Subtotal Exhibit SF                                     97,200
     Ballroom
     Schaumburg Ballroom                             -           27,502     2,400      1,080       1,700
     Schaumburg Center East                      8,840                -       830        350         600
     Schaumburg Center West                      8,840                -       830        350         600
     Schaumburg A                                1,156                        100         60          80
     Schaumburg B                                1,088                        100         60          80
     Schaumburg C                                1,088                        100         60          80
     Schaumburg D                                1,156                        100         60          80
     Schaumburg E                                1,156                        100         60          80
     Schaumburg F                                1,088                        100         60          80
     Schaumburg G                                1,088                        100         60          80
     Schaumburg H                                1,156                        100         60          80
     Utopia Ballroom                                 -            7,021       760        420         480
     Utopia A                                    1,770                -       190        100         120
     Utopia B                                    1,770                -       190        100         120
     Utopia C                                    1,770                -       190        100         120
     Utopia D                                    1,770                -       190        100         120
     Nirvana Ballroom                                -            5,310       570        320         400
     Nirvana A                                   1,770                -       190        100         140
     Nirvana B                                   1,770                -       190        100         140
     Nirvana C                                   1,770                -       190        100         140
         Subtotal Ballroom SF                                    39,833
     Meeting Rooms
     Number of Rooms                                  12             12
     Smallest Room                                   252              -      -         -           -
     Largest Room                                      -          1,770     190       100         120
         Subtotal Meeting Room SF                                 8,287
     Total                                                   145,320
       SF of Function Space per Key (474 rooms)
             Exhibit Hall                      205
             BR/Key                            84
             MR/Key                            17
             (MR+BR)/Key                       102
     Source: Schaumburg Convention Center, mpoint.com, Johnson Consulting



The SCC has a total of 97,200 square feet of exhibit space with a capacity ranging
from 1,600 to 6,300. The main exhibit hall has three main sections, Adventure Hall




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has 32,670 square feet of space, Discovery Hall has 32,400 square feet of space, and
Exploration Hall has 32,130 square feet of function space. There are three ballrooms
at the SCC, the largest is the Schaumburg Ballroom, which has a total of 27,502
square feet and can be broken into ten individual rooms. The other two ballrooms,
the Utopia and Nirvana Ballrooms, have 7,021 square feet and 5,310 square feet
respectively. The Utopia Ballroom can be divided into four spaces, all with 1,770
square feet. The Nirvana Ballroom can be separated into three spaces, all with 1,770
square feet of meeting space. There are 12 meeting rooms. The smallest meeting
room is 252 square feet, while the largest meeting room is 1,770 square feet and has
a capacity ranging from 100 to 190.

The space ratio analysis comparing SCC function space with the 474 rooms at the
adjacent Renaissance hotel reveals that for each hotel room there is 205 square feet
of exhibit space, 84 square feet of ballroom space, 17 square feet of meeting space,
and 102 square feet of combined ballroom and meeting space.

One of the main objectives of the SCC is to act as a generator of economic activity by
drawing in conventions, tradeshows, corporate events, and other meeting events to
the area. The success of this objective is also aided by the close proximity of O’Hare
airport. While an important target market is non-resident or out-of-town groups,
the SCC also acts as a crucial resource to the Woodfield regional center.
Johnson Consulting has attempted to obtain detailed operating and demand
information from the SCC, which the facility and City would not release. Johnson
Consulting has filed a Freedom of Information Act Request to obtain this operating
information with the City and this request was denied.
The development of the Schaumburg Convention Center has shifted the
environment in which a Rockford Hotel and Convention Center would operate. As
mentioned in the Executive Summary of this report, the Schaumburg Convention
Center’s program of spaces is very similar to what Johnson Consulting
recommended for development in Rockford in the 2003 master plan study. This
does not mean that a convention/conference center will not be successful in
Rockford, just that its development program needs to be modified from what was
originally recommended in 2003. The development of the Schaumburg Convention
has created a situation where Rockford must respond by investing in its hospitality
and meeting infrastructure so that it will receive its fair share of hospitality business
and continue to promote and increase the identity of Rockford as a destination.

Bayfront Convention Center, Erie, Pennsylvania

Erie, Pennsylvania has recently opened the new $ 100 million Bayfront Convention
Center campus, which includes the recently opened Bayfront Sheraton Hotel. The
Bayfront Convention Center is located on the shores of Lake Erie’s Presque Isle Bay




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and is part of a larger district focused on improving the image of Erie. The City of
Erie and the surrounding area decided to build the new convention center in order
to increase the economic growth and visitor diversity to the region. Erie has over
4,000 hotel rooms in its market area and has been very effective in realigning their
Convention & Visitors Bureau to promote the new facility which has led to better
than expected performance in its first year of operations. Erie has a solid
infrastructure to support the new convention center, such as the Erie International
Airport, served by USAir, Continental, and Northwest.

Figure 5-2 shows the floor plans of the Bayfront Convention Center facility.

                                                  Figure 5-2




Table 5-2 provides a breakdown of the square footage and capacities of the function
space at the Bayfront Convention Center.




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                                                    Table 5-2
                                      Bayfront Convention Center
                                 Summary of Exhibit and Meeting Space
                                                    Size (SF)               Capacity (# of Persons)
                                          Individual      Combined
                                                                         Theater   Classroom     Banquet
                                          (Smallest)      (Largest)

 Exhibit Hall
 Exhibit Hall                                      -            28,800     4,114      1,920         1,920
 North Hall                                   18,000                 -     2,571      1,200         1,200
 South Hall                                   21,550                 -     1,549        720           720
     Subtotal Exhibit SF                                        28,800
 Ballroom
 Grand Ballroom                                     -           13,500     1,929        900           900
 East                                           8,100                -     1,157        540           540
 West                                           5,400                -       771        360           360
     Subtotal Ballroom SF                                       13,500
 Meeting Rooms
 Number of Rooms                                     15              8
 Smallest Room                                      683              -     -         24            24
 Largest Room                                         -          2,701    330        150           150
     Subtotal Meeting Room SF                                   14,023
 Total                                                          56,323
   SF of Function Space per Key (200 rooms)
         Exhibit Hall                         144
         BR/Key                               68
         MR/Key                               71
         (MR+BR)/Key                          138
 Source: Bayfront Convention Center, mpoint.com, Johnson Consulting



The main exhibit hall can be split into two sections, the smallest of which is 10,800
square feet with a theater capacity of 1,543 people. The full square footage of the
exhibit hall is 28,800 square feet; the theater capacity is 4,114 people. In addition to
the exhibit space there is also 13,500 square feet of ballroom space that can be split
into two sections. In the split configuration, each half can accommodate 771 people
in theater configuration and in full configuration, the ballroom can accommodate
1,928 people in theater format. There is also a large supply of meeting space at the
Bayfront Convention Center. In individual configuration, there are 15 rooms and in
combined configuration, there are eight rooms. The smallest meeting room is 683
square feet and the largest is 2,701 square feet. The total amount of meeting space is
14,154 square feet. Total facility function space, exhibit, ballroom, and meeting
space totals 56,323 square feet of space.




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The Bayfront Convention Center is attached to the 200-room Sheraton Hotel, which
opened in summer, 2008. When a space-ratio analysis is performed on the Bayfront
Convention Center and the Sheraton Hotel, there is 144 square feet of exhibit space
per room, 68 square feet of ballroom space per room, 71 square feet of meeting
space per room, and 138 square feet of combined ballroom and meeting space per
room. The Bayfront Convention Center is well sized for the adjacent Sheraton and
the City of Erie.

The Sheraton also has a supply of its own meeting space as well. Table 5-3 provides
an overview of the Sheraton’s meeting space.

                                                   Table 5-3
                                      Sheraton Erie Bayfront Hotel
                                 Summary of Exhibit and Meeting Space
                                                  Size (SF)                Capacity (# of Persons)
                                          Individual      Combined
                                                                        Theater   Classroom   Banquet
                                          (Smallest)      (Largest)

 Ballroom
 Number of Rooms                                    3               1
 Smallest Room                                  1,094               -    115        75          88
 Largest Room                                       -           3,288    345        225         260
     Subtotal Ballroom SF                                       3,288
 Meeting Rooms
 Number of Rooms                                    4               -
 Smallest Room                                    332               -     35         22          25
 Largest Room                                       -             858     90         55          65
     Subtotal Meeting SF                                        2,518
   Total                                                        5,806

 SF of Function Space per Key (200 rooms)
  Ballroom SF/ Key                                                16
  Meeting Room SF/ Key                                            13
  (BR+MR)/ Key                                                    29
 Source: Sheraton Erie Bayfront Hotel, mpoint.com, Johnson Consulting



Even though the Sheraton is attached to the Bayfront Convention Center, it is
sensible for a hotel to have its own supply of function space, even if it is a minimal
amount, as it is often used for receptions, smaller events, as a supplement to the
convention center if needed. The Bayfront Sheraton has 3,288 square feet of
ballroom space that can be split into three sections, the smallest of which is 1,094
square feet. There are also four meeting rooms, which range in size from 332 square
feet to 858 square feet. When a space-ratio analysis is conducted, there is 16 square
feet of ballroom space per room, 13 square feet of meeting space per room, and 29
square feet of both ballroom and meeting space per room.




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The Bayfront Convention Center, since opening in the summer of 2007, has
operated well above projections. Table 5-4 below provides a demand calendar for its
partial year of operations as well as an estimate of events for the rest of the year.

                                                   Table 5-4
                   Bayfront Convention Center Demand Summary by Event Type

                                                                             Total    Average
          Event Type                                  # of Events
                                                                          Attendance Event Size

          Convention/Tradeshows                                  34             13,090             385
          Consumer Shows                                         26             34,500           1,327
          Banquets                                               50             16,985             340
          Meetings                                               92             23,635             257
          Other                                                   4              4,700             N/A
            Total                                               202             92,910             460

          Source: C.H. Johnson Consulting, Inc.



In 2007, there were 202 events at the Bayfront Convention Center. Of the 202 events,
34 were conventions or trade shows with annual attendance of 13,090; 26 were
consumer shows with annual attendance of 34,500; 50 were banquets with annual
attendance of 16,985; 92 were meetings with annual attendance of 23,635; and 4
were other events with 4,700 annual attendees. Total annual attendance in 2007 was
92,910 with 202 events with an average event size of 460 people.

Revenue Profile

Table 5-5 provides a revenue statement for the Bayfront Convention Center from
2007, actual, and 2008, projected.

                                                   Table 5-5
                            Bayfront Convention Center - Revenue Profile
                                                          2007 (Actual)                  2008 (Projected)
 Facility Revenues
    Facility Rental                                                 $233,457                         $280,148
    Food & Beverage                                                 1,007,974                       1,209,569
    Utility Reimbursment                                               21,325                          25,590
    Wage Reimbursment                                                  36,499                          43,799
    PFMS Revenue                                                       34,650                          41,580
    Equipment Rental                                                   85,074                         102,089
 Total Revenues                                                    $1,418,979                      $1,702,775
 Source: Johnson Consulting, Bayfront Convention Center




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There are six revenue categories at the Bayfront Convention Center; facility rental,
food & beverage service, utility reimbursement, wage reimbursement, PFMS
revenue, and equipment rental revenue. The two major sources of revenue are food
and beverage service, which generated $1 million in sales in 2007, and facility rental,
which generated revenue of $233,500 in the same year. Total revenue in 2007 was
$1.42 million. Management projects revenue will increase 20 percent in 2008, with
projected total facility revenue of $1.7 million.

Expense information was not available at the time of this report; however the
facility is operated in association with the Eric County Convention Center
Authority’s arena, baseball stadium and performing arts center, resulting in a
centralized administration and finance function.

Of all the facilities examined for this assignment, this and the facility described
below are most in line with what is being communicated in this report. This facility
is in line with the type of complex seen as reasonable and practical for Rockford.

Saint Charles Convention Center, St. Charles, Missouri

The Saint Charles Convention Center (SCCC) opened in April of 2005 and has
exceeded operating projections as well as the expectations of show organizers and
event attendees alike. The SCCC is only a few minutes from the Missouri River and
the Lambert-St. Louis International Airport, which makes it one of the most
desirable meeting destinations in the Midwest region. Additionally, there is a large
hotel room supply in the area and the SCCC is adjacent to a 296-room Embassy
Suites Hotel.

Figure 5-3 is a floor plan of the upper level and lower levels of the SCCC.




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                                                  Figure 5-3




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The SCCC has a variety of convention and exhibit spaces. Table 5-6 summarizes the
center’s various function spaces and their capacities.

                                                          Table 5-6
                                            St. Charles Convention Center
                                         Summary of Exhibit and Meeting Space
                                                   Size (SF)                            Capacity (# of Persons)
                                           Individual     Combined                                                Exhibits (#
                                                                              Theater   Classroom    Banquet
                                           (Smallest)     (Largest)                                               of Booths)

 Exhibit Hall
 Exhibit Hall & Jr. Ballroom                        -          35,700           3,955        2,450      2,970           178
 Exhibit Hall North                            14,500               -           1,600        1,000      1,200            72
 Exhibit Hall South                            13,100               -           1,445          900      1,080            65
 Jr. Ballroom A                                 1,450               -             160          100        120             -
 Jr. Ballroom B                                 1,530               -             170          105        130             -
 Jr. Ballroom C                                 1,530               -             170          105        130             -
 Jr. Ballroom D                                 1,515               -             170          105        130             -
      Subtotal Ballroom SF                                     35,700
 Ballroom
 Grand Ballroom                                     -          16,200           1,800        1,115      1,350             81
 Grand Ballroom A                               4,010               -             445          275        330             20
 Grand Ballroom B                               4,010               -             445          275        330             20
 Grand Ballroom C                               4,010               -             445          275        330             20
 Grand Ballroom D1                              1,390               -             155           95        120              -
 Grand Ballroom D2                              1,410               -             155           95        120              -
 Grand Ballroom D3                              1,370               -             150           95        110              -
     Subtotal Ballroom SF                                      16,200*
 Meeting Rooms
 Number of Rooms                                    6               5
 Smallest Room                                    840               -              90          60          70             na
 Largest Room                                       -           2,150             215         145         170             na
     Subtotal Meeting Room SF                                   6,520
 Total                                                         58,420

 SF of Function Space per Key (296 rooms)
   Exhibit Hall SF/ Key                                           121
   Ballroom SF/ Key                                               75**
   Meeting Room SF/ Key                                            22
   (Ballroom & Meeting Room SF)/ Key                              97**
 *When Jr. Ballroom is included, total banquet space is 22,225 square feet.
 **Includes Jr. Ballroom space
 Source: St. Charles Convention Center, mpoint.com, Johnson Consulting




The exhibit space at the SCCC is comprised of a main exhibit hall that can be
separated in half. The square footage of the exhibit hall is 27,600 square feet and has
a capacity of 1,600 to 3,100 people. The exhibit hall can also be coupled with the Jr.
Ballroom, which at 6,025 square feet allows for a total maximum exhibit hall with
35,700 square feet of space.




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The SCCC also offers a grand ballroom, 16,200 square feet, and several meeting
rooms, a total of 5,250 square feet. When a space ratio analysis is performed on the
adjacent 296-room Embassy Suites Hotel there is 121 square feet of exhibit space per
room, 75 square feet of ballroom space per room, 18 square feet of meeting space
per room, and when ballroom and meeting space are combined there is 93 square
feet of function space per room.

The Embassy Suites Hotel also offers a small amount of its own meeting spaces.
Table 5-7 provides an overview of the spaces as well as a space-ratio analysis for
just the Embassy Suites meeting space.

                                                   Table 5-7
                              Embassy Suites St. Charles Hotel & Spa
                                 Summary of Exhibit and Meeting Space
                                                  Size (SF)                Capacity (# of Persons)
                                          Individual      Combined
                                                                        Theater   Classroom   Banquet
                                          (Smallest)      (Largest)

 Meeting Rooms
 Number of Rooms                                    8               7
 Smallest Room                                    300               -         -         12             -
 Largest Room                                       -           2,800       300        150           160
   Total                                                        6,312

 SF of Function Space per Key (296 rooms)
  Meeting Room SF/ Key                                            21
 Source: Embassy Suites St. Charles Hotel & Spa, mpoint.com, Johnson Consulting



The Embassy Suites has four meeting rooms and a number of boardrooms. There
are 21 square feet of meeting space per room at the Embassy Suites.

The SCCC, since opening in 2005, has operated well above projections and
expansion is already being considered. Table 5-8 below provides a month-by-month
demand history for the facility, for 2007, by event type, which allows seasonal
trends to be identified.




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                                                                          Table 5-8
                                          St. Charles Convention Center Demand Summary - 2007 Demand Profile
                                                                                                                                                    2007
Event Type                   Jan        Feb       March    April    May       June     July       Aug      Sept       Oct       Nov       Dec
                                                                                                                                                    Total

Conventions                        -          -       1        1        2          2       1          1           -       1         1           -        10
 Attendance                        -          -     100      250      675      2,050     200        300           -     500       425           -     4,500
Tradeshows                         -         4         2       3          -       1           -        4        4          4          -      1           23
  Attendance                       -     3,525     3,100     406          -     500           -    1,400    2,660      1,680          -    150       13,421
Consumer Shows                   3           2         2        1        1         1       1           1        1          3         3          -        19
 Attendance                 11,200      12,106     9,331    1,800    2,100     3,000   1,500       4,055    1,500      5,250     6,220          -    58,062
Banquets                         6          1          8       10       12        7        5           7        8          9         7       18          98
 Attendance                    932        150      2,068    2,707    4,074      767      985       1,114    1,555      1,655     1,356    4,344      21,707
Meetings                        27          28        22       26       35        30      18          18       18         27        19       18         286
 Attendance                  3,061       2,754     2,623    3,100    3,635     3,955   1,153       2,404    3,956      5,551     1,935    2,833      36,960
Special Events                   1           3         -        4        2        1        2           1       2          4         1         1          22
 Attendance                  1,500       2,950         -    4,390    3,200      750    2,410       1,273     500        921       740     1,500      20,134
Total Events                    37          38        35       45       52        42      27          32       33         48        31       38         458
  Total Attendance          16,693      21,485    17,222   12,653   13,684    11,022   6,248      10,546   10,171     15,557    10,676    8,827     154,784

Source: C.H. Johnson Consulting, Inc.




                 In 2007, there were 458 events at the SCCC. Of the 458 events, 10 were conventions
                 with annual attendance of 4,500; 23 were tradeshows with annual attendance of
                 13,421; 19 were consumer shows with annual attendance of 58,062; 98 were
                 banquets with annual attendance of 21,707; 286 were meetings with 36,960 annual
                 attendees; and 22 were special events with 20,134. Total annual attendance in 2007
                 was 154,784 people.

                 Revenue and Expense Profile

                 Table 5-9 provides a revenue and expense statement for the SCCC from 2007.




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                                                   Table 5-9
                                  St. Charles Convention Center
                              2007 Revenue and Expense Statements

                   Facility Revenues
                     Facility Rental revenue                                     $992,426
                     Service Revenue                                              555,604
                     Ancillary Income                                           3,197,199
                     Other Revenue                                                140,893
                       Total Revenues                                          $4,886,122
                   Event Expenses
                    Event Expenses                                               $425,166
                    Ancillary Expense                                           1,127,022
                      Total Event Expense                                      $1,552,188
                   Total Net Event Income                                      $3,333,934
                   Personnel and Operating Expenses
                    Personnel Expenses                                         $1,994,970
                    Operating Expenses                                          1,560,855
                      Total Personnel and Operating Expenses                   $3,555,825
                   Total Expenses                                              $5,108,013
                   Net Operating Income (Deficit)                               ($221,891)

                   Source: St. Charles Convention Center, Johnson Consulting



There are four revenue categories for the SCCC, facility rental, service revenue,
ancillary income, and other income. The highest-grossing revenue category was
ancillary income with approximately $3.20 million in revenues, the vast majority of
which comes from catering revenue, $1.97 million. This was followed by facility
rental revenue, approximately $992,000. All revenue sources totaled $4.89 million in
2007.

There were event expenses of $1.55 million, which resulted in a total net-event
income of $3.33 million. Personnel expenses for the SCCC were $1.99 million and
Operating expenses were $1.56 million, which totals $3.55 million. Total expenses
includes event, personnel, and operating expenses, was $5.11 million. When total
expenses are deducted from the total revenue of $4.89 million, there is a net
operating deficit of $221,891.

The facility was funded by the city and county, using a TIF district. The hotel was
built by the private sector.

This facility is in line with the type of complex seen as reasonable and practical for
Rockford.




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Grand Wayne Convention Center, Fort Wayne, Indiana

The Grand Wayne Convention Center (GWCC) is a state-of-the-art convention
facility in very close proximity to a good supply of hotel rooms and an international
airport. The facility was expanded and upgraded in 2005. The convention center
expansion was part of a larger, downtown redevelopment effort that has
transformed the City of Fort Wayne and attracted new businesses and a thriving
arts culture. The facility is located in northeast Indiana and offers convenient access
to nine major Midwest cities that makes it attractive as a meeting destination.

Table 5-10, on the following page, provides a summary of exhibit and meeting space
offered at the GWCC.




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                                                    Table 5-10
                                   Grand Wayne Convention Center
                                 Summary of Exhibit and Meeting Space
                                                    Size (SF)               Capacity (# of Persons)
                                          Individual      Combined
                                                                         Theater   Classroom   Banquet
                                          (Smallest)      (Largest)

 Exhibit Hall
 Exhibit Hall                                      -            50,000     4,000      2,880       3,080
 1/3                                          16,000                 -     1,344        900         980
 1/2                                          24,360                 -     2,184      1,440       1,500
 2/3                                          32,300                       2,688      1,980       1,960
     Subtotal Exhibit SF                                        50,000
 Ballroom
 Anthony Wayne Ballroom                             -           10,000     1,152        540           630
 Anthony Wayne Ballroom A                       4,035                -       384        180           280
 Anthony Wayne Ballroom B                       5,890                -       672        360           350
 Calhoun Ballroom                                   -            6,000       660        360           400
 Calhoun Ballroom A                             2,400                -       200        126           160
 Calhoun Ballroom B                             2,400                -       200        126           160
 Calhoun Ballroom C                               625                -        50         27            40
 Calhoun Ballroom D                               625                -        50         27            40
 Harrison Room                                      -            6,420       660        360           400
 Harrison Room 1                                1,280                -       100         63            80
 Harrison Room 2                                2,550                -       200        126           160
 Harrison Room 3                                3,850                -       320        216           240
 Harrison Room 4                                5,100                -       480        288           320
     Subtotal Ballroom SF                                       22,420
 Meeting Rooms
 Number of Rooms                                    3                1
 Smallest Room                                  1,015                -       100         63            70
 Largest Room                                       -            3,395       344        189           220
     Subtotal Meeting Room SF                                    3,395
 Total                                                          75,815
   SF of Function Space per Key (246 rooms)
         Exhibit Hall/key                     203
         BR/Key                               91
         MR/Key                               14
         (BR+MR)/Key                          105
 Source: Grand Wayne Convention Center, mpoint.com, Johnson Consulting



The GWCC has a main exhibit hall that can be broken into three smaller sections,
with a total combined area of 50,000 square feet. The exhibit hall has a capacity
ranging from 2,880 people, in a classroom configuration, to 4,000 people in theater
configuration. The GWCC also has three ballroom spaces. The Anthony Wayne




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ballroom is the largest and is 10,000 square feet with a capacity ranging from 540
people to 1,152 people depending on configuration. The Anthony Wayne Ballroom
can also be divided into two sections. The Calhoun Ballroom is 6,000 square feet and
can be broken into four sections ranging in size from 625 square feet to 2,400 square
feet. The full Calhoun Ballroom has a capacity ranging from 360 to 660 people. The
last ballroom space is the Harrison that is also divisible into four sections that range
from 1,280 square feet to 5,100 square feet. The full Harrison Ballroom is 6,420
square feet. There is only one room specified as a meeting room; it has 3,395 square
feet and can be divided into three sections, the smallest of which is 1,015 square feet.
Several of the ballroom spaces are flexible enough in design to be used as smaller
meeting rooms as well.

When a space ratio analysis is preformed on the adjacent 246-room Hilton Hotel
there is 203 square feet of exhibit space per key, 91 square feet of ballroom space per
key, 14 square feet of meeting space per key, and 105 square feet of combined
ballroom and meeting space.

Figure 5-4 shows the floor plans of the GICC.

                                                  Figure 5-4




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In addition to the meeting space at GWCC, the adjacent Hilton Hotel offers a variety
of meeting spaces, which are summarized below.

                                                  Table 5-11
                   Hilton Fort Wayne at the Grand Wayne Convention Center
                                 Summary of Exhibit and Meeting Space
                                                  Size (SF)                 Capacity (# of Persons)
                                          Individual         Combined
                                                                         Theater   Classroom      Banquet
                                          (Smallest)         (Largest)

 Meeting Rooms
 Number of Rooms                                    7    -
 Smallest Room                                    540                -        30         21            30
 Largest Room                                       -            1,400       150         90           100
   Total                                                         7,590

 SF of Function Space per Key (296 rooms)
  Meeting Room SF/ Key                                              31
 Source: Hilton Fort Wayne at the Grand Wayne Convention Center, mpoint.com, Johnson Consulting



There is 7,590 square feet of ballroom and meeting space at the Hilton.

The Grand Wayne Convention Center has 400 events per year 35 percent are
convention, 25 percent is large corporate business, 24 percent is local business, and
the remaining 16 percent are community-oriented events such as fundraisers and
charities. The revenue from the events, concessions, and other revenue generators
totaled $4.8 million in 2007. The expenses in 2007 were $4.1 million, which left the
Grand Wayne with $700,000 in net operating income, including tax support. There
are 23 full-time employees at the facility.

A new 250 room Courtyard by Marriott has recently been completed and is across
the street from the GWCC and connected by a breezeway. The Courtyard was
completed for a cost of $25 million and the city provided a number of additional
incentives to attract the developer, White Lodging.




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Three Rivers Convention Center, Kennewick, Washington

Description of Market

The Three Rivers Convention Center (TRCC) is
located in Kennewick, Washington in southeast
Washington, across the street from Vista Field
Airport. The population for the Kennewick in
2007 was 62,182, a 12.5 percent growth since
2000. The median resident age is 32.3 years,
while the state of Washington had a median
age of 35.3 years. The estimated median
household income in 2005 of the tri-cities area
of Kennewick, Pasco and Richland was $45,400, while the state of Washington had a
median household income of $49,262.

Description of Facility (Profile) and Nearby Hotel Supply

Since opening in June of 2004, the facility has been managed by VenuWorks, a
private management company based in Kennewick. The facility has over 32,000
square feet of meeting space with roughly two thirds of that in the form of
exhibition space. The facility offers a wide range of services, including catering
which is done through a third-party company, which splits its revenues with the
facility.

There are 3,364 hotel rooms within a 10-minute drive of the TRCC and 763 rooms
within a few blocks. The primary hotel that services the TRCC is the 120-room
Hilton Garden Inn, located across the street from the facility.

The Three Rivers Convention Center was built after it became clear that demand for
convention space had grown beyond what the local hotel population could supply.
As the tri-cities area attempts to establish itself as a regional destination, it became
increasingly important to offer the services and amenities needed to attract
conventions and conventioneers. Figure 5-5 provides the floor plan for the TRCC.




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                                                  Figure 5-5




Table 5-12, below, profiles all of the meeting and function space at the TRCC.




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                                                  Table 5-12
                                   Three Rivers Convention Center
                                Summary of Exhibit and Meeting Space
                                                     Size (SF)               Capacity (# of Persons)
                                             Individual     Combined
                                                                           Theater   Classroom   Banquet
                                             (Smallest)     (Largest)

  Exhibit Hall/Ballroom
    Great Hall                                        -           21,600    2,050        1,200    1,400
    Great Hall A                                  5,400                -      500          270      340
    Great Hall B                                  5,400                -      500          270      340
    Great Hall C                                  5,400                -      500          270      340
    Great Hall D                                  5,400                -      500          270      340
     Subtotal Exhibit Hall SF                                     21,600
  Meeting Rooms
   Number of Rooms                                    8                2
   Smallest Room                                    900                -       60          45        50
   Largest Room                                       -            5,516      550         320       355
     Subtotal Meeting Room SF                                     10,974
  Total                                                           32,574

  SF of Function Space per Key (120 Rooms)                      32,574
    Exhibit Hall SF/ Key                                            180
    Meeting Room SF/ Key                                             91
  Source:Three Rivers Convention Center, mpoint, Johnson Consulting



The Three Rivers Convention Center has a total of 21,600 square feet of
exhibit/ballroom space with a capacity ranging from 500 to 2050. The smallest
meeting room is 900 square feet and has a capacity ranging from 45 to 60 people.
The largest meeting room is 5,516 square feet and has a capacity ranging from 320 to
550.

The space-ratio analysis comparing convention center space with the number of
rooms at the adjacent Hilton Garden Inn reveals that for each hotel room there is
180 square feet of exhibit space, and 91 square feet of meeting space.

Demand and Operating Profile

The facility attracts a wide range of events, hosting 250 events last year with a total
attendance of 130,243 people. Of those 250 events, 23 were conventions, 7 were
trade shows, 1 was a consumer show, 78 were banquets or social events, 68 were
meetings, and the remaining 73 were a mix of miscellaneous events, internal uses,
and spiritual services. Given its size, the target attendance at any one event is 450,




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and its actual average attendance is not far off at 520. In total, the facility had 298
event days booked in 2007. The TRCC draws events and visitors primarily from the
region and state levels; currently it lacks the overall size as well as air and
automobile infrastructure to grow beyond its current levels of demand.

Table 5-13 shows the TRCC operating revenues and expenses.

                                           Table 5-13
                                 Three Rivers Convention Center
                              2007 Revenue and Expense Statements

              Facility Revenues
                Building Rent                                              $364,622
                Facility Fees                                                 4,472
                Concession Revenue                                              498
                Reimbursed Credit Card Fees                                      64
                Co Promotional Events                                             -
                Reimbursed Wages Revenue                                     12,500
                Contract Labor                                                2,114
                Outside Expense Revenue                                       4,596
                In-House Equipment Revenue                                  119,197
                Reimbursed Utilities                                          8,666
                Signage/Sponsorship Revenue                                   2,925
                Reimbursed Marketing Fees                                         -
                Customer Liability Insurance                                    206
                Centerplate Commission                                      207,874
                Ticket Sales                                                  7,484
                Interest Income                                              79,133
                Miscellaneous Revenue                                         3,805
              Total Revenues                                               $818,156
              Expenses
                Total Personnel Services                                    $640,297
                Total General and Administrative Expense                      46,186
                Total Occupancy Expense                                      238,494
                Total Travel Expense                                          13,498
                Total Event Expense                                           57,682
                Total Services Operations Expense                            226,135
              Total Expenses                                              $1,222,292
              Net Operating Income (Deficit)                               ($404,136)

             Source: Three Rivers Convention Center, Johnson Consulting




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In keeping with industry norms, the TRCC operates with greater expenses than
revenues.


Capital and Operating Funding Profile

The facility was publically financed using bonds and sales tax increments and is
currently owned by the Kennewick Public Facilities District (KPFD). The facility is
managed by a third party, VenuWorks.

South San Francisco Conference Center, South San Francisco,
California

The South San Francisco Conference Center (SSFCC) is located one mile north of
San Francisco International Airport at the Highway 101 South Airport Boulevard
exit. Downtown San Francisco is a 15-minute drive from the Center, and Silicon
Valley is less than 30 miles away. Figure 5-6 shows the location of the facility.




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                                                  Figure 5-6

                             South San Francisco Conference Center
                                         Location Map




         Source: The South San Francisco Conference Center



Operating as a stand-alone conference center, the facility is supported by a variety
of nearby hotels that offer approximately 2,000 rooms. The facility was built
immediately between two hotels in order to augment their low level of meeting
space. Located at an area with a high concentration of prosperous corporations, the
SSFCC’s operating performance has been better than expected, holding events for
mostly training and information exchange purposes. In the last fiscal year, annual
food and beverage revenues were approximately $373,500. Total operating revenues
were $1.1 million.

The SSFCC has approximately 16,500 square feet of meeting and exhibit space.
Another 3,600 square feet of pre-function space surrounding the ballroom




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accommodates registration, displays, and breaks. The main lobby is a four-story
atrium.

The full-service SSFCC is equipped with a complete kitchen and banquet staff, in-
house audio-visual services, an infrared-assisted listening system for the hearing
impaired, a high-quality public address system, and ample electrical, telephone, and
data capability throughout. Event planners are provided with a private event office
for on-site administrative needs.

The ground-level shipping-receiving-service entrance provides quick accessibility to
all meeting rooms. Vehicles are able to enter and exit the Grand Ballroom easily
through this entrance. Figure 5-7 shows the floor plan of the facility.




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                                                   Figure 5-7
                                 South San Francisco Conference Center
                                               Floor Plan




          Source: The South San Francisco Conference Center



The Grand Ballroom contains 13,500 square feet and can be divided into as many as
10 different sound-insulated rooms. The smaller ballroom, Baden Room, is 3,000
square feet and can be divided in half. Table 5-14 summarizes the sizes of the
meeting space.




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                                                          Table 5-14
                                     South San Francisco Conference Center
                                         Summary of Exhibit and Meeting Space
                                                   Size (SF)                          Capacity (# of Persons)
                                           Individual      Combined                                              Exhibit
                                                                         Classroom      Theater    Banquet
                                           (Smallest)      (Largest)                                            (10x10's)

Ballroom/ Multi-Purpose
Grand Ballroom                                      -          13,500           700        1,200        850            72
Section 1                                         750               -            25           60         40            na
Section 2                                         750               -            25           60         40            na
Section 3                                         750               -            25           60         40            na
Section 4                                         750               -            25           60         40            na
Section 5                                       3,750               -           180          400        250            15
Section 6                                       3,750               -           180          400        250            15
Section 7                                         750               -            25           60         40            na
Section 8                                         750               -            25           60         40            na
Section 9                                         750               -            25           60         40            na
    Subtotal Ballroom SF                                       13,500
Meeting Rooms
Number of Rooms                                     2                1
Smallest Room                                   1,500                -          130          300        190            14
Largest Room                                        -            3,000           70          160         90            na
    Subtotal Meeting Room SF                                     3,000
Total                                                          16,500

Source: South San Francisco Conference Center, mpoint.com, Johnson Consulting



        The SSFCC was converted from an existing structure (an old photo lab) and, by
        using the existing structure, was built for $7.5 million in 1987 dollars.

        Table 5-15 shows the rental rates for the conference space in the facility.




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                                                  Table 5-15
                             The South San Francisco Conference Center
                                           Rental Rates
                                                           Approximate
                                                                           Rental
                                                             Square             1)
                                                                           Rate
                                                             Footage

                       Grand Ballroom
                            One Salon (A-D or G-J)                 750       $225
                            Two Salons Combined                  1,500      $325
                            Three Salons Combined                2,250      $425
                            Four Salons Combined                 3,000      $475
                            One Large Salon (E or F)             3,750       $525
                            Half Ballroom                        6,750       $775
                            Full Ballroom                       13,500     $1,425
                       Baden Room
                            One Room                             1,500      $325
                            Combined Rooms                       3,000      $475
                       1)
                            Per Full Day Session, 7am-6pm or 6pm-1am.
                       Source: The South San Francisco Conference Center



The facility is not an International Association Conference Center (IACC)-accredited
conference center and is essentially configured as a hotel’s meeting-room block. It
does not have a dedicated theater or dedicated computer labs. Its multi-purpose
nature has given it flexibility in the type of events it hosts. The SSFCC does offer a
high level of technology and utility supports for meeting attendees. Convenient
telephone and data service through both ISDN and analog lines is available
throughout the building. Additionally, a full line of computers and presentation
equipment are available for rent.

Substantial complimentary parking is provided for all meetings and events. On-site
parking is available for approximately 700 cars. Additionally, an extension parking
lot is located one block south and across the street from the SSFCC, between the
Travelodge and the Grosvenor Hotel. This lot contains 250 additional spaces. The
SSFCC shares parking with both neighboring hotels: the Holiday Inn to the south,
and the Ramada Inn to the north.

Johnson Consulting obtained event data from the South San Francisco Conference
Center for a typical stabilized year of operation. The data provides relevant
information about the demand profile for the facility. Table 5-16 shows the profile of
demand for the facility.




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                                                  Table 5-16
                                           South San Francisco
                                            Conference Center
                                          Distribution of Events
                                                                Number of
                                     Type
                                                                 Events

                                     Corporate                     262
                                     Associations                   69
                                     Government                     23
                                     SMERF                         104
                                     Total                         458

                                     Source: South San Francisco
                                     Conference Center



The corporate and SMERFE segments held the most events in the South San
Francisco Convention Center. Generally, the corporations and SMERFE groups use
the facility for single-day events such as receptions, parties, and meetings.
Estimated attendance for the facility was 100,000, indicating an average event size of
218 attendees.

Table 5-17 shows the operating proforma of the facility from a typical stabilized
year of operation.




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                                                  Table 5-17
                             South San Francisco Conference Center
                                      Operating Proforma
                                                                Revenues/
                                                                Expenses

                        Operating Revenues
                          Rental Income                          $563,400
                          Event Services                           113,600
                          Food and Beverage                        373,500
                           Total                                $1,050,500
                          Total Revenue and Investment Income
                          Occ. Tax Audit Collect                    $4,300
                          Occupancy Tax                          1,614,700
                          Interest Revenue                          69,800
                          Recovery of Bad Debt                           0
                            Total Revenue                       $2,739,300
                        Operating Expenses
                          Salaries/Benefits                      $558,200
                          Incentive Program                         1,200
                          Operations/Maintenance Services         492,400
                          Operations/Maintenance Supplies          25,700
                          Transportation Services                  21,500
                          Marketing Services                       89,800
                          Meeting Travel/Dues/Member                9,300
                          Legal/Professional Services             183,600
                          Audit Services                            9,200
                          Bookkeeping/Payroll                       4,100
                          City Finance Services                     6,800
                          General Insurance                        16,300
                          Bank Charges/Bad Debt                    16,100
                          Office Suppplies/Postage/Comp            20,700
                          Printing                                  4,200
                          Utilities/Phone                          87,500
                            Total Operating Expenses             1,546,600
                        Property Leases/Taxes                     445,900
                        Debt Service and Fiscal Charges           527,600
                        Year-End Audit Adjustments                      0
                        Total Budget Expenditures               $2,520,100
                        Net Surplus (Deficit)                    $219,200

                        *Includes Room Tax and Debt Service
                        Source: South San Francisco




Rockford, Illinois                                                           Section 5 Page 31
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As shown on the table, on that particular year, operating revenues of the facility
were approximately $1.1 million. Total revenues were approximately $2.7 million.
The operation is funded in part by a local room tax. Approximately $1.6 million of
the $2.7 million comes from room tax and earned interest. Operating expenses
amounted to approximately $1.5 million. Including leases, taxes, debt service and
fiscal charges, the expenses amounted to approximately $2.5 million. The facility
added approximately $219,200 to its fund balance.

When only “true” operating revenues and expenses are considered, however – i.e.,
occupancy tax, leases, taxes, debt service, and fiscal charges are excluded – the
operating revenues would amount to $1,124,600, while operating expenses
$1,546,600, resulting in an operating deficit of $422,000.

Implications

The events and meeting industry is strong and healthy as each of these model
facilities host hundreds of events a year. Further, each of these facilities supports at
least one but often more than one hotel next to their facility. It is believed that each
community is more than satisfied with the cost-benefit relationship with these
facilities. It is our judgment that a venue in downtown Rockford would fare as well
as the facilities profiled in these examples. Most governments or private sector
entities that develop an events facility realize the facilities incur a loss each year but
this is greatly outweighed by the economic impact they have on their community or
private-sector establishment, as is the case with each case study listed in this report.

In order to diversify and increase the economic growth and redevelop the historic
downtown area, an initiative such as a hotel and convention/conference center is
necessary. A hotel and convention/conference center will have a tremendous
impact on not only the hospitality industry of Rockford but will also positively
influence a wide variety of business sectors.

Although Rockford has the regional appeal to attract meetings and events, the area
has not been marketed extensively within the meetings industry. Part of the reason
is that Rockford has not had a modern facility that is appropriate for many large
meetings and events, but once such a facility is added to the marketplace, it will
help to raise the awareness of the area. Rockford does have a very well run CVB,
which is very effective in marketing the Rockford area for sports-oriented events
and could allow a new convention/conference center to be marketed very
effectively.

There is a wide array of facility types ranging from small, stand-alone venues in the
tri-cities area of southeast Washington and South San Francisco, to larger integrated
venues found in Schaumburg and Ft. Wayne. Our assessment of the market




Rockford, Illinois                                                         Section 5 Page 32
Convention Center and Hotel Feasibility Analysis                               January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




indicates that the models, sizes and quality levels seen in St. Charles and Erie are
ideal for Rockford and should be visited and examined further by the RACVB and
City of Rockford regarding finance plan and deal structure.




Rockford, Illinois                                                    Section 5 Page 33
Convention Center and Hotel Feasibility Analysis                          January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




PROGRAM RECOMMENDATIONS AND OPERATING PROJECTIONS
Rockford currently utilizes area hotels, SportsCore Two, and the MetroCentre to
host existing consumer shows and other meeting events. These facilities under serve
the community in this capacity and do not capture the Rockford area’s full potential
in the meeting and exhibit events market as described in previous sections of this
report. This section presents Johnson Consulting’s and Conventional Wisdom
Corp’s recommendations for and analysis of the proposed Rockford Convention
Center and a targeted headquarters hotel.

Program Recommendations

Based on our assessment of the Rockford metropolitan area, its current competitive
position, and its growth potential in terms of destination appeal and other
downtown redevelopment efforts, Johnson Consulting, in association with
Conventional Wisdom Corp., recommends a mid-size convention/conference
facility, as conceptually illustrated on Page 3 through Page 6.

As seen in the comparable venues profiled in Section 5, the concept for the new
Rockford Convention Center is focused on high-quality service and facilities for
conventions and conferences with light exhibits or dining, emphasizing flexibility of
facility design and operation.

The primary hall on the ground floor is a 31,500 square-foot, column-free, multi-
function space that can accommodate banquets, entertainment, keynote speakers,
lectures, presentations, product introductions and classroom-style meetings. The
term “light exhibit” refers not only to weight, but to modest utility requirements
and limited equipment impacts on the physical space.

The level of finish in public spaces should be between hospitality- and corporate-
type, providing a balance between visual appeal and durability, acoustically
absorptive rather than reflective, and combining subtle colors and textures. The
finish level inside the multifunction space should be more durable to minimize
damage from the array of events that may utilize the space, but should be of higher
quality than the painted concrete block or precast often used in exhibition halls to
resist wear and tear from heavy freight-handling equipment.

The upper level of the convention center will consist of divisible meeting rooms and
fixed conference rooms with the requisite amount of support and service spaces.

This area is expected to have approximately 27,000 square feet of meeting space.
The larger meeting rooms will be composed of divisible units each approximately




Rockford, Illinois                                                     Section 6 Page 1
Convention Center and Hotel Feasibility Analysis                          January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




1,800 square feet in size, which can be combined with adjacent units to create rooms
as large as 7,200 square feet. These rooms are proportioned such that a maximum
2:1 width-to-depth ratio is never exceeded from the smallest division to the fully
opened configuration. Also, several fixed conference rooms will be included to
appeal to a variety of corporate users and to smaller groups such as working
committees within larger conventions being hosted.




Rockford, Illinois                                                    Section 6 Page 2
Convention Center and Hotel Feasibility Analysis                         January 2010
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      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




As shown in Table 6-1, the projected total space is 58,500 square feet of useable
function space in this initial design scenario, which is within the range justified in
the market research and comparable analysis discussed in the previous sections of
this report. This size will place the Rockford Convention Center in the mid-range
category, an appropriate size for this primarily regional drive-in market. The
convention center should also be designed to be expandable to accommodate

                                                   Table 6-1
                         Rockford Conference Center, Rockford, Illinois
                                             Proposed Program

                                                                Size (in SF)

                   Exhibit Hall                                       31,500
                   Meeting rooms                                      27,000
                   Total                                              58,500

                   Source: Johnson Consulting



To support this convention center, an adjacent 200-room hotel should be
programmed into adjacent sites. Adjacency to the upgraded MetroCentre will
provide occasional exhibit hall overflow and general-session capabilities. As
demand increases and the Rockford market matures, the facility should be designed
to accommodate later expansion with a fully developed exhibit hall of 80,000 square
feet. Other adjacent hotel sites should also be envisioned, and the first 200-room
focused-brand hotel could offer a second tower at a later date.

As is the strategy in many communities, city participation by land assemblage and
in funding all or part of the convention center costs should serve as a sufficient
inducement to attract hotel developers to the project, who should provide private
investment in the hotel development.

Convention Center Projections

In order to evaluate the potential performance of the proposed Rockford
Convention Center, Johnson Consulting reviewed the demand calendars and
financial statements of the selected comparable facilities as discussed in Section 5 of
this report. Table 6-2 provides a comparison of comparable convention/conference
center performance.




Rockford, Illinois                                                             Section 6 Page 3
Convention Center and Hotel Feasibility Analysis                                  January 2010
        C.H. JOHNSON CONSULTING, INC.
               EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                               Table 6-2

                                     Comparison of Convention Center Performance

                                                                                                               South San
                                           Bayfront           St. Charles                      Three Rivers
                                                                                  Grand                         Francisco
                                          Convention          Convention                        Convention
                                                                                  Wayne                        Conference
                                            Center              Center                            Center
                                                                                                                 Center
                                                                                                                South San
                                             Erie PA         St. Charles MO     Ft. Wayne IN   Tri-Cities WA
                                                                                                               Francisco CA

Function Space (SF)
Exhibit Hall                                        28,000           35,700           50,000         21,600          13,500
Ballroom                                            13,500           16,200           22,420            -               -
Meeting Room                                        14,023            6,520            3,395         10,974           3,000
  Total Function Space                              55,523           58,420           75,815         32,574          16,500
Events
Conventions/Tradeshows                                 34                 33              na             30                na
Consumer Shows                                         26                 19              na              1                na
Banquets                                               50                 98              na             78                na
Meetings                                               92                286              na             68                na
Other Events                                            4                 22              na             73                na
  Total Events                                        206                458              na            250               458
Attendance
Conventions/Tradeshows                              13,090           17,921               na         36,574              na
Consumer Shows                                      34,500           58,062               na            150              na
Banquets                                            16,985           21,707               na         10,895              na
Meetings                                            23,635           36,960               na         13,503              na
Other Events                                         4,700           20,134               na         69,121              na
  Total Attendance                                  92,910          154,784               na        130,243         100,000
Average Attendance
Conventions/Tradeshows                                 385               543              na           1,219              na
Consumer Shows                                       1,327             3,056              na             150              na
Banquets                                               340               222              na             140              na
Meetings                                               257               129              na             199              na
Other Events                                         1,175               915              na             947              na
Financials
Revenues                                     $1,702,775         $4,886,122        $4,800,000       $818,156      $1,124,600
Expenses                                           -            $5,108,013        $4,100,000     $1,222,292      $1,546,600
Net Operating Income                               -               ($221,891)       $700,000      ($404,136)      ($422,000)

*Includes Consumer Shows
**Does not include Salaries, Wages, and other operating expenses
Source: Respective facilities, Johnson Consulting



        As the table shows, each of the facilities perform well in certain market segments,
        based on the strength of the center’s offering in terms of exhibit space, ballroom
        space, or meeting space. At the comparable facilities, when details are available, the
        number of exhibit events, e.g., conventions, trade shows, and consumer shows,
        ranges from 31 events at Three Rivers Convention Center to 60 events at Bayfront


        Rockford, Illinois                                                                             Section 6 Page 4
        Convention Center and Hotel Feasibility Analysis                                                  January 2010
                 C.H. JOHNSON CONSULTING, INC.
                         EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                 Convention Center. Average exhibit/event attendance ranges from 150 per
                 consumer show in Three Rivers Convention Center, to 3,056 per consumer show in
                 Saint Charles Convention Center. Banquets range from 50 events in Bayfront
                 Convention Center to 98 events in Saint Charles Convention Center, with average
                 attendance between 140 and 340. Meeting events account for a substantial
                 component of the demand calendar with 92 to 286 events per year, averaging 129 to
                 257 attendees.
                 Although size-wise, the recommended program for Rockford Convention Center is
                 closest to Saint Charles Convention Center and Bayfront Convention Center, all five
                 of the comparables are taken into consideration in projecting event demand for
                 Rockford. Based on the execution of the recommended building program, Johnson
                 Consulting projects that a well designed, effectively marketed, and appropriately
                 supported convention center in Rockford would be able to perform at the following
                 level.

                                                                      Table 6-3
                                                Rockford Conference Center, Rockford, Illinois
                                                        Event Demand Assumptions
                                            Year 1     Year 2     Year 3     Year 4      Year 5   Year 6   Year 7      Year 8   Year 9       Year 10

Conventions and Trade Shows                      23         25         27           29       30       30       30          30           30       30
Consumer Shows                                   15         17         18           19       20       20       20          20           20       20
Concerts and Entertainment Events                 5          6          6            6        6        6        6           6            6        6
Banquets and Social Events                       23         25         27           29       30       30       30          30           30       30
Meetings and Seminars                           101        110        118          127      135      135      135         135          135      135
Other Events                                      8          9          9           10       10       10       10          10           10       10
  Total                                         175        192        205          220      231      231      231         231          231      231

Exhibit Hall Occupancy                         52%        57%        61%           65%      67%      67%      67%         67%      67%          67%
Source: Johnson Consulting




                 As the table shows, the proposed Rockford Convention Center could reasonably be
                 expected to host 175 events in Year 1, 231 events in Year 5. Similar to the St. Charles
                 Convention Center, the RCC will have a very high level of banquet and meeting
                 business as the City of Rockford does not currently provide these offerings to the
                 community and there is pent-up demand. Additionally, if the indoor multi-Sports
                 arena development and downtown developments are brought to market they could
                 increase primarily consumer shows, 5 to 7 additional events, and banquets, 3 to 4
                 additional events.

                 Table 6-4 shows the projected attendance at the proposed Rockford Convention
                 Center.




                 Rockford, Illinois                                                                                 Section 6 Page 5
                 Convention Center and Hotel Feasibility Analysis                                                      January 2010
                 C.H. JOHNSON CONSULTING, INC.
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                                                                     Table 6-4
                                                Rockford Conference Center, Rockford, Illinois
                                                           Projected Attendance
                                          Year 1    Year 2     Year 3     Year 4    Year 5    Year 6    Year 7      Year 8    Year 9    Year 10

Conventions and Trade Shows               11,500     12,800     14,000     15,400    16,200    16,200    16,200      16,200    16,200    16,200
Consumer Shows                            22,500     25,800     27,700     29,600    31,600    31,800    32,000      32,200    32,400    32,600
Concerts and Entertainment Events          7,500      9,100      9,200      9,400     9,500     9,500     9,600       9,700     9,700     9,800
Banquets and Social Events                11,500     12,800     14,000     15,400    16,200    16,200    16,200      16,200    16,200    16,200
Meetings and Seminars                     30,300     33,300     36,100     39,200    42,100    42,400    42,700      42,900    43,200    43,500
Other Events                               4,800      5,500      5,600      6,300     6,400     6,400     6,400       6,400     6,400     6,400
  Total                                   88,100     99,300    106,600    115,300   122,000   122,500   123,100     123,600   124,100   124,700

Source: Johnson Consulting




                 As the table shows, the events at Rockford Convention Center are projected to
                 generate 88,100 attendees in Year 1, growing to 122,000 in Year 5. Upon operational
                 stabilization, attendance is expected to continue growing, reaching 124,700 in Year
                 10. It should be noted that meetings and convention and tradeshow attendees may
                 be in the market multiple days. As such, “turnstile” attendance will be higher than
                 the attendance shown above.

                 These event demand and attendance projections also assume:

                             The RACVB, in conjunction with the convention center, would support in
                             the marketing and sales effort of the new facility.
                             The center is located in an attractive setting with an appropriate complement
                             of hotel rooms.
                             Rockford continues to make progress on its overall revitalization with
                             continued investment of the types of attractions that appeal to convention
                             goers and meeting planners.

                 Financial Projections

                 In this subsection we present the operating projections for the potential convention
                 center facility. Operating projections for the proposed Rockford Convention Center
                 are based on the projected event and attendance as shown in the previous two
                 tables.

                 In addition, the operating projections of the convention center are based on
                 comparable facilities’ operations, the unique characteristics of the local market area
                 and the proposed surrounding developments and trends that are likely to affect the
                 facility in the future.

                 Table 6-5 shows the projected operating revenues and expenses of the convention
                 center.


                 Rockford, Illinois                                                                               Section 6 Page 6
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                                                                              Table 6-5
                                                   Rockford Conference Center, Rockford, Illinois
                                       Pro Forma Operating Statement of Revenue and Expenses ($000's, Inflated)
                                                         Year 1     Year 2    Year 3    Year 4     Year 5    Year 6    Year 7    Year 8    Year 9    Year 10

        Revenue
         Event Revenue
    1    Space Rental                                      $773     $1,071    $1,179    $1,300     $1,402    $1,444    $1,488    $1,532    $1,578     $1,626
    2    Equipment Rental                                     77       107       118       130        140       144       149       153       158        163
    3    Net Food and Beverage                               624       727       807       897        980     1,013     1,048     1,084     1,121      1,160
    4    Event Services Income                                55        62        69        76         81        84        86        89        91         94
    5      Sub-total                                      $1,530    $1,967    $2,173    $2,404     $2,604    $2,686    $2,771    $2,859    $2,949     $3,042
         Other Revenue
    6    Advertising and Sponsorships                        $20       $21       $21       $22        $23       $23       $24       $25       $25       $26
    7    Other Revenue                                        16        20        22        24         27        27        28        29        30        31
    8      Sub-total                                         $36       $41       $43       $46        $49       $51       $52       $54       $55       $57
    9          Total Operating Revenue                    $1,566    $2,008    $2,216    $2,450     $2,653    $2,737    $2,823    $2,912    $3,005     $3,100
        Expenses
   10     Salaries and Wages                                $651      $699      $759      $865       $891      $918      $946      $974    $1,003     $1,033
   11     Employee Benefits                                  215       231       250       286        294       303       312       321       331        341
   12     Passthrough Labor                                   27        31        34        38         41        42        43        44        46         47
   13     Maintenance and Repairs                            256       290       319       352        379       390       402       414       427        439
   14     Cleaning                                           110       125       137       151        163       168       173       178       183        189
   15     Utilities                                          376       413       445       481        511       527       542       559       575        593
   16     Sales and Marketing                                 75        77        80        82         84        87        90        92        95         98
   17     General and Administrative                         102       105       109       112        115       119       122       126       130        134
   18     Insurance                                           55        57        58        60         62        64        66        68        70         72
   19     Other Operating Expenses                           140       153       165       183        191       197       203       209       215        222
   20     Reserve For Replacement                             75       102       113       124        134       138       142       146       151        155
   21       Total Expenses                                $2,082    $2,283    $2,470    $2,734     $2,866    $2,952    $3,041    $3,132    $3,226     $3,323
   22 Net Operating Income                                 ($516)    ($275)    ($253)     ($284)    ($213)    ($216)    ($218)    ($219)    ($221)     ($223)

 Source: Johnson Consulting




Rockford, Illinois                                                                                                                            Section 6 Page 7
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As shown on the table, the Rockford Convention Center is projected to generate
total revenues of $1.6 million in Year 1, $2.65 million in Year 5, and $3.1 million in
Year 10. Operating expenses are projected to amount to $2.1 million in Year 1, $2.9
million in Year 5, and $3.3 million in Year 10. As a result, the facility is expected to
incur operating deficit of $516,000 in Year 1 and $213,000 in Year 5, stabilizing in the
low $200,000s in the years that follow.

These projections assume the Rockford Convention Center as a stand-alone facility.
When the management of the convention center is integrated into that of the
adjacent headquarter’s hotel, the hotel operator may assume all this operating
liability. Therefore, deficit reduction may be achieved by achieving economies of
scale and overhead reductions may result from effective joint management of the
convention center and hotel.

Operating projections shown in Table 6-5 are based on the following assumptions.

Revenue Assumptions

Table 6-6 shows the rental assumptions that translate to the projected Space Rental
(Lines 1 from Table 6-5) and Equipment Rental (Line 2 from Table 6-5) revenues.

                                                   Table 6-6
                        Rockford Conference Center, Rockford, Illinois
                                Rental Revenue Assumptions
                                                                      Unit          Base

     Exhibit Hall Rental                                       per show day          $3,500
                                                            per move-in/out day      $1,750
     Ballroom Rental                                           per show day                $0
                                                            per move-in/out day            $0
     Meeting Room Rental                                       per show day          $1,800
                                                            per move-in/out day        $900
     Equipment Rental                                           % of space rental       10%
     Source: Johnson Consulting



Table 6-7 shows the food and beverage service revenue assumptions that translate
to net food and beverage revenue (Line 3).




Rockford, Illinois                                                                  Section 6 Page 8
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                                                      Table 6-7
                              Rockford Conference Center, Rockford, Illinois
                             Food and Beverage Service Revenue Assumptions

Revenue                                                     Unit                  Base (Gross)    % Net to Facility

Conventions and Trade Shows                            per attendee                   $20.00            20%
Consumer Shows                                         per attendee                    $5.00            40%
Concerts and Entertainment Events                      per attendee                   $12.00            20%
Banquets and Social Events                             per attendee                   $22.00            20%
Meetings and Seminars                                  per attendee                   $15.00            20%
Other Events                                           per attendee                    $0.00            20%
Source: Johnson Consulting



   Table 6-8 shows event service commission assumptions that translate to event
   service income revenue. These event service commission rates apply in full to only
   conventions/ trade shows and at 80 percent of rates to consumer shows.

                                                      Table 6-8
                             Rockford Conference Center, Rockford, Illinois
                               Event Services Commission Assumptions
         Revenue                                                        Unit                     Base

         Electrical/ Other Commissions                                per booth                     $5.00
         Cleaning/ Labor Commissions                                  per booth                     $1.06
         Audio Visual Commissions                                     per booth                     $1.75
         Telecommunication Commissions                                per booth                     $2.00
        Source: Johnson Consulting



   Other revenue assumptions include advertising and sponsorship at $20,000 per
   year, and other revenue at 1 percent of total revenues.

   Expense Assumptions

   Table 6-9 shows expense assumptions that translate to each of the Expense line
   items.




   Rockford, Illinois                                                                            Section 6 Page 9
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                                                            Table 6-9
                             Rockford Conference Center, Rockford, Illinois
                                        Expense Assumptions
      Expenses                                                             Unit                        Base

      Salaries and Wages                                            see Salary Table                          --
      Employee Benefits                                                % of salaries                        33%
      Passthrough Labor                                            % of event services                      50%
      Maintenance and Repairs                                         per show day                        $1,000
                                                                   per move in/ out day                     $500
      Cleaning                                                        per event day                        $400
      Utilities                                                       per event day                        $900
                                                                 per building net sq. foot                 $2.20
      Sales and Marketing                                         per year in first 2 years              $75,000
      General and Administrative                                      per SF of facility                   $1.75
      Insurance                                                  per SF of exhibit space                   $1.75
      Other Operating Expenses                                         % of sub-total                        7%
      Reserve For Replacement                                   % of revenues (minus F&B)                    8%
      Source: Johnson Consulting



Table 6-10 shows the salary table that translates to salaries and wages expense (Line
10).

                                                           Table 6-10
                           Base Salary Expenses for Rockford Convention Center*
                                                                  Number of Staff                Salary - Year 1
                                                                                             per Staff
                                                                Year 1       Year 4
                                                                                             Member          Total

 General Manager                                                  1.0          1.0             $85,000        $85,000
 Assistant Manager/ Business Manager                              1.0          1.0             $60,000         60,000
 Controller                                                       1.0          1.0             $60,000         60,000
 Sales/ Marketing/ PR Manager                                     1.5          1.5             $45,000         67,500
 Operations Manager, Sr. Engineer                                 1.0          1.0             $45,000         45,000
 Event Manager                                                    2.0          2.5             $37,000         74,000
 Convention Services Manager                                      1.0          1.5             $32,000         32,000
 Engineers, Building Maintenance/Grounds                          3.0          4.5             $30,000         90,000
 Housekeeping/ Event Turnover                                     2.0          3.0             $27,000         54,000
 Clerical and Receptionist                                        1.0          2.0             $27,000         27,000
 Security                                                         3.5          4.0             $16,000         56,000
   Total                                                         18.0         23.0              --          $650,500

 *Benefits are calculated at additional 33 percent of salary.
 Source: Johnson Consulting




Rockford, Illinois                                                                                    Section 6 Page 10
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Hotel Projections

Johnson Consulting recommends a 200-room focused-brand hotel with nationally
prominent hotel brand like Hyatt, Sheraton, Hilton, Marriott, or others. A focused
hotel is a limited-service hotel with higher quality finishes, offering of some full-
service amenities. The Sheraton in Erie is an example of a focused-brand hotel.

Johnson Consulting used data from two sources to justify our projections:

    1. Observations on lodging statistics of Winnebago County hotels, and

    2. Data from comparable hotels nationally, reflecting expectations for the
       expected quality of the hotel (Hilton Garden Inn-type or Embassy Suites-
       type).

Recommended Hotel

The analysis and financial projections for a 200-room hotel at the Rockford
Convention Center development are summarized below:

              The hotel will be directly adjacent to the convention center with its
              31,500 square foot exhibit hall and 27,000 square feet of meeting space,

              The hotel itself will also offer meeting space at 50 square feet of space per
              hotel key. Example products would be the new 200-room Erie Sheraton
              or the new Marriott Courtyard in Ft. Wayne, Indiana. Both of these
              models would be responsible, but still may require financial support, of
              many alternative varieties to be discussed with the CVB. The hotel space
              itself could be reduced if the hotel is fully integrated into the convention
              center’s operation

              The hotel is expected to open with 57 percent occupancy in Year 1 and
              stabilize at 65 percent occupancy in Year 5.

              Given the quality, amenities offered, and targeted market, the hotel is
              expected to be able to start with an $84.70 average daily rate (ADR). At
              Year 5, ADR is expected to be $97.30, slightly higher than the city-wide
              ADR.

              Revenue and expense estimates of the hotel are based on a HOST report
              by Smith Travel Research, which compiles revenue-and-expense ratios of
              properties comparable to the proposed 200-room hotel in Rockford.

The financial projections are presented in Table 6-11 on the following page.




Rockford, Illinois                                                          Section 6 Page 11
Convention Center and Hotel Feasibility Analysis                                 August 2009
C.H. JOHNSON CONSULTING, INC.
          EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING


                                                                                           Table 6-11
                                                   Statement of Operating Performa Scenario A - 200-Room Hotel at Rockford Conference Center
                                                  Year 1                        Year 2    Year 3    Year 4    Year 5                       Year 6    Year 7    Year 8    Year 9     Year 10
      1   Room Count                                   200                          200       200       200       200                          200       200       200       200         200
      2   Available Room Nights                    73,000                        73,000    73,000    73,000    73,000                       73,000    73,000    73,000    73,000      73,000
      3   Occupancy Rates                            57.0%                        59.0%     61.0%     63.0%     65.0%                        65.0%     65.0%     65.0%     65.0%       65.0%
      4   Occupied Room Nights                     41,580                        43,040    44,500    45,960    47,420                       47,420    47,420    47,420    47,420      47,420
      5   Average Daily Rate                       $84.70                        $87.70    $90.80    $94.00    $97.30                      $100.00   $102.80   $105.70   $108.70     $111.70
      6   RevPAR                                   $48.24                        $51.71    $55.35    $59.18    $63.20                       $64.96    $66.78    $68.66    $70.61      $72.56
      7   Percent of Change from Prior Year         --                             7.2%      7.0%      6.9%      6.8%                         2.8%      2.8%      2.8%      2.8%        2.8%
          Parking Assumptions
     8    Drive-In Rate                               80%                           80%       80%       80%       80%                          80%       80%       80%       80%         80%
     9    Overnight Room Parkers                   33,264                        34,432    35,600    36,768    37,936                       37,936    37,936    37,936    37,936      37,936
    10    Self-Park Rate $ to Hotel                 $6.00                         $6.00     $6.00     $7.00     $7.00                        $7.00     $8.00     $8.00     $8.00       $8.00
    11    Parkers Using Valet                         15%                           15%       15%       15%       15%                          15%       15%       15%       15%         15%
    12    Valet Rate/Day, gross, to hotel           $8.00                         $8.00     $8.00     $9.00     $9.00                        $9.00    $10.00    $10.00    $10.00      $10.00
          Revenue                                            %         POR                                               %       POR                                                            %
    13      Rooms                                  $3,522    60.5%     $84.70    $3,775    $4,041    $4,320    $4,614   56.8%     $97.30    $4,742    $4,875    $5,012    $5,155      $5,297   56.8%
    14      Hotel Food and Beverage                 1,839    31.6%      44.24     2,064     2,313     2,586     2,888   35.5%      60.90     2,968     3,051     3,137     3,226       3,315   35.6%
    15      Telephone                                  79     1.3%       1.89        86        93       101       110    1.4%       2.32       113       116       119       123         126    1.4%
    16      Other Operated Departments                 79     1.3%       1.89        86        93       101       110    1.4%       2.32       113       116       119       123         126    1.4%
    17      Parking Revenue                           210     3.6%       5.04       217       224       268       277    3.4%       5.84       277       315       315       315         315    3.4%
    18      Rentals and Other Income                   90     1.5%       2.16        98       106       116       126    1.5%       2.65       129       133       136       140         144    1.5%
    19        Hotel Revenue                        $5,818    100.0%   $139.91    $6,325    $6,870    $7,493    $8,124   100.0%   $171.32    $8,341    $8,605    $8,839    $9,081      $9,323   100.0%
          Expenses
    20      Rooms                                  $1,018    28.9%     $24.48    $1,072    $1,127    $1,184    $1,241   26.9%     $26.17    $1,276    $1,311    $1,348    $1,387      $1,425   26.9%
    21      Hotel Food and Beverage                 1,455    79.1%      34.99     1,571     1,737     1,916     2,111   73.1%      44.51     2,169     2,230     2,293     2,358       2,423   73.1%
    22      Telephone                                  65    83.2%       1.57        71        76        83        89   81.2%       1.88        92        94        97       100         102   81.2%
    23      Other Operated Departments                  3     3.3%       0.06         2         2         2         1    1.3%       0.03         1         2         2         2           2    1.3%
    24      Parking                                    67    32.0%       1.61        68        70        82        83   30.0%       1.75        83        94        94        94          94   30.0%
    26        Hotel Expenses                       $2,608    44.8%     $62.72    $2,784    $3,012    $3,267    $3,526   43.4%     $74.35    $3,621    $3,732    $3,834    $3,940      $4,047   43.4%
    27 Departmental Operating Income               $3,210    55.2%     $77.20    $3,540    $3,858    $4,226    $4,598   56.6%     $96.96    $4,720    $4,874    $5,005    $5,141      $5,276   56.6%
          Undistributed Operating Expenses
    28      Administrative & General*                $326     5.6%      $7.84      $348      $371      $397     $422     5.2%      $8.91     $434      $447      $460      $472        $485     5.2%
    29      Credit Card Commissions                   122     2.1%       2.94       126       131       135      138     1.7%       2.91      142       146       150       154         158     1.7%
    30      Marketing                                 256     4.4%       6.16       272       289       307      325     4.0%       6.85      334       344       354       363         373     4.0%
    31      Utility Costs                             204     3.5%       4.90       215       227       240      252     3.1%       5.31      259       267       274       282         289     3.1%
    32      Property Operations and Maintenance       279     4.8%       6.72       297       316       337      357     4.4%       7.54      367       379       389       400         410     4.4%
    33        Total                                $1,187    20.4%     $28.54    $1,259    $1,333    $1,416    $1,495   18.4%     $31.52    $1,535    $1,583    $1,626    $1,671      $1,715   18.4%
    34 Gross Operating Profit                      $2,023    34.8%     $48.65    $2,282    $2,525    $2,810    $3,103   38.2%     $65.44    $3,185    $3,290    $3,378    $3,470      $3,561   38.2%
       Selected Fixed Charges
    35   Insurance                                   $105     1.8%      $2.52      $114      $124      $135     $146     1.8%      $3.08     $150      $155      $159      $163        $168     1.8%
    36 Income Before Management Fees               $1,918    33.0%     $46.14    $2,168    $2,401    $2,675    $2,957   36.4%     $62.36    $3,035    $3,135    $3,219    $3,306      $3,393   36.4%
    37 Base Mgmt. Fees                               $145     2.5%      $3.50      $158      $172      $187     $203     2.5%      $4.28     $209      $215      $221      $227        $233     2.5%
    38 Income After Mgmt. Fees                     $1,773    30.5%     $42.64    $2,010    $2,229    $2,488    $2,754   33.9%     $58.08    $2,827    $2,920    $2,998    $3,079      $3,160   33.9%
    39 Reserve for Replacement                       $175     3.0%      $4.20      $221      $275      $337     $406     5.0%      $8.57     $417      $430      $442      $454        $466     5.0%
    40 Project Net Operating Income                $1,598    27.5%     $38.44    $1,788    $1,955    $2,151    $2,348   28.9%     $49.51    $2,410    $2,490    $2,556    $2,625      $2,694   28.9%
 Source: Johnson Consulting




Rockford, Illinois                                                                                                                                                                 Section 6 Page 12
Conference Center and Hotel Feasibility Analysis                                                                                                                                        August 2009
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As shown in the table, in Year 1, the 200-room hotel is projected to generate $5.8
million of revenues and incur $4.2 million in expenses 1 , which results in net
operating income of $1.6 million. In Year 5, revenues are expected to grow to $8.1
million, expenses of $5.8 million, and net operating income $2.3 million. In Year 10,
revenues are projected to amount to $9.3 million, expenses $6.6 million, and net
operating income $2.7 million.

Assuming a hypothetical capital budget of $110,000 per room, a capital cost of
$22.00 million would be required, which is not financially feasible on its own cash
flow. TIF support, having the city fund meeting space and/or parking facilities and
many other tools could be used to fund the gap. Also, the city could take a patient
equity stake in the hotel or use tax-exempt bonds as another means to help in the
hotel’s feasibility.

Numerous discussions need to be held regarding visualizing and structuring the
finance plan for the hotel and convention center. This report sets the stage and by
example sets the stage for such analysis and discussions. As this effort progresses
towards development, a cost estimator should be brought into more accurately
gauge the development cost of the hotel.

Conclusion

Long-term planning and execution has been a challenge for the City of Rockford
and downtown redevelopment improvements are slow in coming to fruition as a
result. As such, Rockford is not maximizing its potential, but this also indicates
opportunity for development, especially in the hotel and meeting market sectors.
There is currently growing momentum with several downtown projects under
discussion and development. The Rockford Convention Center and Hotel project
would add further energy to the downtown redevelopment efforts and finally bring
much needed meeting and function space to Rockford, in addition to hotel rooms to
the traditional downtown core, a long-time goal of the City. While Rockford has
developed a national reputation over the last ten years as a destination, its real
estate development has continued to have local roots and orientation.

Regional/national convention and meeting-group demand generated by the new
convention facility could help balance hotel occupancy trends during the difficult
week-day period for local hotels and the proposed Rockford Convention Center and




1“Expenses” includes hotel expenses, undistributed operating expenses, insurance, base
management fees, and reserve for replacement.




Rockford, Illinois                                                     Section 6 Page 13
Convention Center and Hotel Feasibility Analysis                           January 2010
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      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




headquarters hotel, allowing for the tourism industry of the Rockford area to grow
at a greater pace. This in turn would help establish Rockford as a serious national
destination for leisure and group travel. In addition, un-accommodated demand
exists within the market for meeting and function space. Rockford is losing local
events to the surrounding regional area and is not retaining local meeting-event
dollars in the city. In order to diversify the market mix, induce meeting and group
demand, increase the profile of the city and maximize downtown redevelopment
and economic impact for the community, it is recommended that a high-quality
convention facility with 58,500 square feet of function space and an adjacent 200-
room focus-branded hotel be developed.




Rockford, Illinois                                                   Section 6 Page 14
Convention Center and Hotel Feasibility Analysis                         January 2010
C.H. JOHNSON CONSULTING, INC.
         EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




ECONOMIC AND FISCAL IMPACT ANALYSIS
This section analyzes the economic and fiscal benefit that would be generated from
the development of the Rockford Convention Center and Hotel. Impact is analyzed
separately for first the convention center and then the hotel. Key findings of both
economic and fiscal benefits are then summarized.

As noted elsewhere, if devised properly and if other developments happen
downtown as discussed in this report, this project will induce net demand to
Rockford, or serve growth that will evolve. In our professional opinion, this project
will not transfer material levels of demand from the I-90 corridor. In fact, this hotel
and convention center will create enough demand to provide overflow to those
properties.

Definitions

The economic and fiscal impact analysis is based on event demand and attendance
projections of the Rockford Convention Center and Hotel. For the purpose of this
analysis, impact is discussed in terms of the Rockford area economy. The levels of
impacts are described as follows:

         Direct impacts - are an expression of the spending that occurs as a direct
         result of the events and activities that occur in the Convention Center and
         Hotel. For example, a convention attendee’s expenditures on hotel rooms
         and meals are a direct economic impact.
         Indirect impacts - consist of re-spending of the initial or direct expenditures,
         or, the supply of goods and services resulting from the initial direct
         spending in these facilities. For example, a convention attendee’s direct
         expenditure on a restaurant meal causes the restaurant to purchase food and
         other items from suppliers. The portion of these restaurant purchases that
         are within the local, regional, or state economies is counted as an indirect
         economic impact.
         Induced impacts – represent changes in local consumption due to the
         personal spending by employees whose incomes are affected by direct and
         indirect spending. For example, a waiter at the restaurant may have more
         personal income as a result of the convention attendee’s visit. The amount of
         the increased income the waiter spends in the local economy is considered
         an induced impact.
         Personal income – measures increased employee and worker compensation
         related to the events being analyzed. This figure represents increased payroll




Rockford, Illinois                                                         Section 7 Page 1
Convention Center and Hotel Feasibility Analysis                              January 2010
C.H. JOHNSON CONSULTING, INC.
         EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




         expenditures, including benefits paid to workers locally. It also expresses
         how the employees of local businesses share in the increased outputs.
         Employment impact – measures the number of jobs supported in the study
         area related to the spending generated as a result of the events occurring in
         the convention center, MetroCentre, Coronado Theatre, and Davis Park.
         Employment impact is stated in a number of full-time equivalent jobs.

This analysis differentiates impacts from spending by people coming from out-of-
town and by local residents, defined as follows:

         Net New Spending - is spending by out-of-town attendees, exhibitors, and
         other visitors who come from outside the subject area, (i.e., city, county,
         metro area, and State of Illinois), which represents the amount of ”new
         dollars” that flow into the respective economies.
         Transfer Spending - Spending by those who live in the market area
         represents ”transfer” spending. For example, a resident of the City of
         Rockford who attends an event would transfer income from one sector of the
         City’s economy to another, and therefore is not bringing new dollars into the
         City economy. Nevertheless, they are part of the economic activities
         generated by the Rockford Convention Center and Hotel.

Therefore, the analysis will present total impacts of the convention center and hotel,
as expressed through net new spending (to the city, county, metro area, and State of
Illinois) and transfer spending.

Economic Impact of the Convention Center

Economic impact analysis of the Rockford Convention Center is based on the
facility demand and attendance projections described in Section 6. In their stabilized
year of operation (Year 5), Rockford Convention Center is projected to host a total of
231 events, generating more than 122,000 attendees. Table 7-1 summarizes the
event demand by venue.




Rockford, Illinois                                                      Section 7 Page 2
Convention Center and Hotel Feasibility Analysis                           January 2010
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         EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                   Table 7-1
                        Rockford Conference Center, Rockford, Illinois
                          Projected Event Demand and Attendance (Year 5)

                                                           # of      # of Event      # of
                                                          Events        Days      Attendees

            Conventions and Trade Shows                         30         120       16,200
            Consumer Shows                                      20          80       31,600
            Concerts and Entertainment Events                    6           6        9,500
            Banquets and Social Events                          30          30       16,200
            Conferences and Meetings                           135         135       42,100
            Other Events                                        10          10        6,400
                                                               231         381      122,000
            Source: Johnson Consulting



The number of days that an attendee spends in the market (person-days) serves as
the basis of the economic impact estimate. Based on the attendance figures
presented above, Johnson Consulting estimated the number of person-days that will
result from the activities hosted on the facilities. Table 7-2 below shows the
assumptions of visitor origin, which is derived from actual data (for concerts,
entertainment events, family shows, and sporting events), and experience in similar
facilities.




Rockford, Illinois                                                                       Section 7 Page 3
Convention Center and Hotel Feasibility Analysis                                            January 2010
   C.H. JOHNSON CONSULTING, INC.
             EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                          Table 7-2
                            Rockford Conference Center, Rockford, Illinois
                                          Attendee Origin Assumptions

                                          Average                      % from    % from       % from        % from
                                                           % from
                                           Event                       Outside   Outside      Outside       Outside
                                                            City
                                          Length                        City     County        MSA           State
                                              (a)            (b)         (c)        (d)            (e)         (f)

Conventions and Trade Shows                         4.0        10%         90%         86%           81%         61%
Consumer Shows                                      4.0        60%         40%         30%           23%         17%
Concerts and Entertainment Events                   1.0        60%         40%         30%           23%         17%
Banquets and Social Events                          1.0        60%         40%         30%           20%         10%
Conferences and Meetings                            1.0        50%         50%         38%           28%         21%
Other Events                                        1.0        60%         40%         30%           23%         17%
Notes:
Column (b) represents the percentage of event attendees who are City residents.
Column (c) represents the percentage of event attendees who are out-of-City visitors.
Column (b) plus Column (c) equals 100 percent.
Column (d) is a subset of Column (c). It expresses the percentage of all out-of-County visitors.
Column (e) is a subset of Column (d). It expresses the percentage of all out-of-MSA visitors.
Column (f) is a subset of Column (e). It expresses the percentage of all out-of-State visitors.
Source: Johnson Consulting



   The numbers of attendees in combination with the length of stay in the local market
   are two of the primary indicators of event impacts. Accordingly, Johnson
   Consulting developed estimates of local person-days, non-local person-days, and
   non-local hotel room nights. Table 7-3 summarizes these estimates.




   Rockford, Illinois                                                                               Section 7 Page 4
   Convention Center and Hotel Feasibility Analysis                                                    January 2010
         C.H. JOHNSON CONSULTING, INC.
                    EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                                  Table 7-3
                                        Rockford Conference Center, Rockford, Illinois
                                             Estimate of Person-Days and Room Nights

                                                                                        # of Person-Days
                                                      Average                    From         From           From       From       # of
                                            # of
                                                      Length        Local       Outside      Outside        Outside    Outside    Room
                                          Persons                                 City       County          MSA        State
                                                      of Stay                                                                     Nights
                                             (a)          (b)         (c)         (d)          (e)            (f)        (g)           (h)

Conventions and Trade Shows                 16,200          2.8      4,460       40,100       38,090         36,190     27,140     11,370
Consumer Shows                              31,600          1.0     18,960       12,640        9,480          7,110      5,330      2,190
Concerts and Entertainment Events            9,500          1.0      5,700        3,800        2,850          2,140      1,600        660
Banquets and Social Events                  16,200          1.0      9,720        6,480        4,860          3,240      1,620      1,830
Conferences and Meetings                    42,100          2.3     21,050       21,050       15,790         11,840      8,880      8,210
Other Events                                 6,400          1.0      3,840        2,560        1,920          1,440      1,080        440
 Total                                     122,000                  63,730       86,630       72,990         61,960     45,650     24,700
Notes:
Column (c) represents the estimated person-days from attendees who are City residents.
Column (d) represents the estimated person-days from attendees who are out-of-City visitors.
Column (e) is a subset of Column (d). It expresses the estimated person-days from out-of-County visitors.
Column (f) is a subset of Column (e). It expresses the estimated person-days from out-of-MSA visitors.
Column (g) is a subset of Column (f). It expresses the estimated person-days from out-of-State visitors.
Source: Peoria Civic Center, Johnson Consulting



         As shown in the table, events at the four facilities or event types are estimated to
         generate approximately 63,730 local person-days and 86,630 person-days from out-
         of-city visitors, including 72,990 person-days from out-of-county visitors, 61,960
         person-days from out-of-MSA visitors; 45,650 person-days from out-of-State
         visitors. These visitors are estimated to generate 24,700 room nights. The number of
         person-days by type is determined by the number of projected attendees (in column
         a), the average length of stay (in column b), and their origin (as shown previously in
         Table 7-2).

         Room nights were estimated using two significant assumptions. First, for events
         that are one-day long, it is estimated that 40 to 65 percent of the out-of-town visitors
         to the convention center events would stay overnight in the area and require
         lodging accommodations. Second, the average room occupancy is 1.5 people per
         hotel room.

         As the basis for direct-spending estimates for the economic impact analysis, Johnson
         Consulting used the average daily spending per attendee by type of events as
         shown in Table 7-4. The average daily-spending assumptions are derived from a
         Rockford travel study conducted by the University of Illinois at Urbana-Champaign
         and experience in similar projects. The spending amounts below are shown in 2009
         dollars.




         Rockford, Illinois                                                                                         Section 7 Page 5
         Convention Center and Hotel Feasibility Analysis                                                              January 2010
   C.H. JOHNSON CONSULTING, INC.
            EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                      Table 7-4
                            Rockford Conference Center, Rockford, Illinois
                          Average Daily Spending per Attendee (in 2009 Dollars)

                                                Consumer
                                                                 Concerts and Conferences/
                           Conventions/          Shows/
                                                                 Entertainment Meetings/         Other Events
                           Trade Shows          Specialty
                                                                    Events     Banquets
                                                  Expo

Type of Spending
Tickets/ Entertainment               $5.80              $3.60          $27.10            $0.00          $7.50
Transportation                       44.20              17.70            8.10            17.70           8.10
Eating and Drinking                  21.90              16.70           16.70            34.80          11.60
Lodging                              81.50              81.50           81.50            81.50          81.50
Shopping                             19.60              14.10           14.10            14.50          11.60
Other                                 8.70               5.30            5.30             6.20           6.20
Total- Day-Trip                   $100.20              $57.40          $71.30           $73.20         $45.00
Total- Overnight                  $181.70            $138.90          $152.80          $154.70       $126.50
Source: CentreEvents, University of Illinois at Urbana-Champaign, Johnson Consulting



   As the table shows, convention and trade show attendees have the highest
   estimated spending levels, with an average of approximately $100.20 per day
   (excluding lodging). In comparison, an attendee to “other” events is estimated to
   spend approximately $45 per day. Spending on shopping and “other” includes
   general retail spending (e.g., necessities and tourism-activity related), but does not
   include “automobile sales.” For attendees who incur lodging, that expenditure is
   estimated to be $81.50 per room night, which is based on the projected average daily
   rate of $97.30 in Year 5 (assumed to be 2015) for the 200-room hotel at the Rockford
   Convention Center, discounted back to 2009 dollars assuming a 3 percent annual
   inflation rate.

   Table 7-5 shows the estimated economic impact of the convention center events.
   Johnson Consulting utilized the IMPLAN input-output model to estimate indirect
   and induced impacts. IMPLAN is a nationally recognized model commonly used to
   estimate economic impacts. An input-output model analyzes the commodities and
   income that normally flow through the various sectors of the economy. The indirect
   and induced spending and employment effects represent the estimated changes in
   the flow of income and goods caused by the direct spending associated with the
   enhanced facilities.




   Rockford, Illinois                                                                        Section 7 Page 6
   Convention Center and Hotel Feasibility Analysis                                             January 2010
C.H. JOHNSON CONSULTING, INC.
         EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




                                                      Table 7-5
                          Rockford Conference Center, Rockford, Illinois
                                        Economic Impact (in $Millions)

                                From
                              Transfer Net New to Net New to Net New to Net New to                     Gross
                              Spending    City     County       MSA       State                        Total
                              by Locals
                                  (a)           (b)           (c)           (d)            (e)           (f)

 Direct Spending                    $4.6          $9.3          $8.4          $7.7           $5.7         $13.9
 Indirect Spending                   1.7           3.2           2.8           2.5            3.1           4.9
 Induced Spending                    2.2           4.3           3.6           3.3            3.8           6.5
   Total                            $8.5         $16.8         $14.8         $13.4          $12.5         $25.4
 Personal Income                    $2.0          $3.8          $3.3          $3.0           $2.8          $5.9
 Employment (in FTE)                  70           136           119           108             70          206
 Notes:
 Column (a) represents economic impact from spending by City residents.
 Column (b) represents economic impact from spending by all out-of-City visitors.
 Column (c) is a subset of Column (b). It expresses economic impact from spending by all out-of-County visitors.
 Column (d) is a subset of Column (c). It expresses economic impact from spending by all out-of-MSA visitors.
 Column (e) is a subset of Column (d). It expresses economic impact from spending by all out-of-State visitors.
 Column (f) represents total economic impact from spending by locals and non-locals.
 Column (f) = Column (a) + Column (b).
 Source: Johnson Consulting



As shown in the table, Johnson Consulting projects, that in their stabilized year of
operation, the new or improved facilities are estimated to generate approximately
$25.4 million in total direct, indirect, and induced spending, $5.9 million in earnings,
and 206 jobs, including impacts from both transfer spending and net new spending.

Table 7-5 also shows the proportion of each measured impact that represents new
activity at the city, county, MSA, and state levels, as summarized on columns (b)
through (e). The convention center’s net new impact to the City of Rockford is
projected to be approximately $16.8 million in spending, $3.8 million in increased
earnings, and 136 jobs. For Winnebago County, the net new impacts are projected
to be approximately $14.8 million in spending, $3.3 million in increased earnings,
and 119 jobs. For the Rockford MSA, the figures are estimated to be approximately
$13.4 million in spending, $3 million in increased earnings, and 108 jobs. On a
statewide level, the convention center events are projected to generate
approximately $12.5 million in net new spending, $2.8 million in increased earnings,
and 70 jobs.




Rockford, Illinois                                                                                Section 7 Page 7
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Fiscal Impact of the Convention Center

Fiscal impacts are tax revenues that result from the spending and income related to
the activities at the Rockford Convention Center. This analysis estimates fiscal
impacts for the governmental units that levy taxes in the jurisdiction. Like the
annual spending estimates on which they are based, fiscal impacts are based on
event demand and attendance in their stabilized year of operation.

The fiscal impacts are the public sector’s return on investment. Fiscal impacts
provide a partial offset to the capital and operating expenditures required to
support the development of the facility. Although the incremental tax revenues
cannot be expected to pay for a publicly funded project in full, fiscal impacts are
important because they improve the ability of the public sector to pay for the
project. The overall economic impacts, including the fiscal impacts, provide a
rationale for public participation in a project.

Based on the gross spending shown in Table 7-5, Johnson Consulting estimated the
fiscal impacts from five major categories of tax revenues that are directly affected by
event attendees’ activity: general sales tax, hotel tax, food and beverage tax, auto
rental tax, and income tax from the incremental increase in personal and corporate
income. Table 7-6 shows the applicable tax rates.




Rockford, Illinois                                                       Section 7 Page 8
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                                                   Table 7-6
                               Applicable Taxes in Rockford, Illinois
                                                                                  Rate

             Tax on General Retail
             State Sales Tax                                                         6.250%
             Winnebago County Public Safety                                          1.000%
             Non Home Rule Sales Tax                                                 1.000%
               Total                                                                 8.250%
             Tax on Eating/ Drinking at Restaurants and Bars
             State Sales Tax                                                         6.250%
             Winnebago County Public Safety                                          1.000%
             Non Home Rule Sales Tax                                                 1.000%
             Redevelopment Fund (Metro) Tax                                          1.000%
               Total                                                                 9.250%
             Tax on Hotels/ Motels
             State Use Tax                                                           6.250%
             Redevelopment Fund (Metro) Tax                                          1.000%
             Hotel Operators' Occupation Tax/ Tourism Tax                            5.000%
               Total                                                                12.250%
             Tax on Auto-Rental
             Automobile Renting Tax                                                  5.000%
             Tax on Income
             State Tax on Personal Income                                            3.000%
             State Tax on Corporate Income                                           4.800%
             Source: Illinois Department of Revenue, City of Rockford Department of Finance



Property tax has not been estimated and arguably, some of the values of retail
establishments are attributable to spending outside the improved and new facilities.

Table 7-7 summarizes the fiscal impact estimates.




Rockford, Illinois                                                                            Section 7 Page 9
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                                                   Table 7-7
                         Rockford Conference Center, Rockford, Illinois
                                        Estimates of Annual Impact

                                                                              Taxable       Tax
                                                                    Rate     Spending    Revenues
                                                                              ($000's)    ($000's)

      Tax on General Retail
      State Sales Tax                                              6.250%                     $595
      Winnebago County Public Safety                               1.000%                       95
      Non Home Rule Sales Tax                                      1.000%                       95
        Total                                                      8.250%      $9,520         $785
      Tax on Eating/ Drinking at Restaurants and Bars
      State Sales Tax                                              6.250%                     $237
      Winnebago County Public Safety                               1.000%                       38
      Non Home Rule Sales Tax                                      1.000%                       38
      Redevelopment Fund (Metro) Tax                               1.000%                       38
        Total                                                      9.250%      $3,798         $351
      Tax on Hotels/ Motels
      State Use Tax                                                 6.000%                    $121
      Redevelopment Fund (Metro) Tax                                1.000%                      20
      Hotel Operators' Occupation Tax/ Tourism Tax                  5.000%                     101
        Total                                                      12.000%     $2,013         $242
      Tax on Auto-Rental
      Automobile Renting Tax                                       5.000%        $563          $28
      Tax on Income
      State Tax on Personal Income                                 3.000%      $5,858         $176
      State Tax on Corporate Income                                4.800%      $5,072         $243
          Total Tax Revenues                                                                $1,826
      Source: Illinois Department of Revenue, City of Rockford Department of Finance,
      Johnson Consulting


As the table shows, direct spending generated by events at the convention center is
projected to result in approximately $1.8 million in tax revenues, which include
$785,000 of retail sales tax, $351,000 in food and beverage tax, $242,000 in hotel/
motel tax, $28,000 in auto rental tax, and $419,000 in personal and corporate income
tax.

The city/county is likely to incur expenses related to providing services to the
improved facilities that are not estimated in this analysis. These expenses include
police, fire protection, emergency medical services, traffic control, street
maintenance, sanitation, and other ongoing operating expenses required to
maintain the environment around the facility. While many of these costs are
charged back to facility users, inevitably these costs would, to some extent, decrease
the overall fiscal benefit to the public sector.




Rockford, Illinois                                                                        Section 7 Page 10
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Economic Impact Analysis of the Hotel

Economic – and later, fiscal – analysis of the hotel is based on the 200-room
program, as recommended in Section 6 of this report.

Hotel guests, by definition, originate from outside the area; thus spending by guests
in the 200-room hotel at the Rockford Convention Center is 100 percent new to
Rockford. However, it is assumed that no more than 15 percent of hotel demand
will be transfer from other hotels in Rockford (or “cannibalization”), while the other
85 percent will be new induced demand. Therefore, only spending by 85 percent of
the hotel guests is considered “true” impact of the hotel.

Additionally, when the benefits of both the convention center and hotel are
combined, a proportionate number of convention center-based room nights are
taken out from the summarization to avoid double counting. Some of this demand
will occur at the convention center, but most of the meeting demand will occur over
and above that presented for the convention center. So, when one adds the
combined effect of the induced demand at the hotel and new room nights from the
convention center, a net gain of room nights is derived. This will be discussed at the
end of this section.

Impact Calculation

The economic impact analysis focuses on the 200-room hotel’s stabilized year of
operation (Year 2015). As shown in Section 6 of this report, the hotel’s occupancy
rate stabilizes at 65 percent, resulting in 47,420 occupied room nights. Eighty-five
percent of those are 40,307 room nights, which generate the “true” impact of the
hotel. According to the expected market segmentation of the hotel, these 40,307
room nights include 21,002 group room nights; 10,902 commercial room nights; and
8,403 leisure and other room nights.

Assuming that the average length of stay per occupied night is 1.2 days across all
segments and the average number of guests per room is 1.4, 1.2, and 1.7 for group,
commercial, and leisure and other segment, respectively, the 40,307 occupied room
nights translate to 68,100 guest days, total. Table 7-8 summarizes the calculation.




Rockford, Illinois                                                     Section 7 Page 11
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                                                          Table 7-8
                    200-Room Hotel at Rockford Conference Center, Rockford, Illinois
                                    Statistics and Assumptions - Stabilized Year

                                                                                               Leisure and
                                                               Group          Commercial                        Total
                                                                                                  Other

# of Occupied Room Nights                                                                                       40,307
Market Segmentation                                            52.1%               27.0%         20.8%         100.0%
# of Occupied Room Nights                                      21,002              10,902        8,403         40,307
x Avrg Length of Stay per Night (in # of Days)                   1.2                 1.2           1.2
x Avrg # of Guests per Room                                     1.4                 1.2           1.7
= Estimated # of Guest-Days                                    35,300              15,700        17,100         68,100

Source: Johnson Consulting



       By definition, these hotel guest-days are all non-local, i.e., from outside City of
       Rockford, thus any related spending would be net new to the city.

       At this point of analysis however, the focus is on the hotel, and therefore, the base
       impact of hotel is the 40,307 room nights, which translate to 68,100 person-days.
       Based on these numbers, Table 7-9 shows the estimated number of room nights and
       guest-days (or person-days) that are net new to the Winnebago County, Rockford
       MSA, and State of Illinois, which is assumed to be 80 percent, 60 percent, and 40
       percent, respectively, of total room nights generated by the 200-room hotel.

                                                          Table 7-9

                             Estimate of Net New Person Days and Room Nights

                                                        Out of        Out of         Out of     Out of
                                                         City         County         MSA        State

                  Room Nights
                  Group                                  21,002           16,802      12,601      8,401
                  Commercial                             10,902            8,722       6,541      4,361
                  Leisure and Other                       8,403            6,722       5,042      3,361
                    Total                                40,307           32,246      24,184     16,123
                  Person-Days
                  Group                                  35,300           28,240      21,180     14,120
                  Commercial                             15,700           12,560       9,420      6,280
                  Leisure and Other                      17,100           13,680      10,260      6,840
                    Total                                68,100           54,480      40,860     27,240
                  Source: Johnson Consulting




       Rockford, Illinois                                                                          Section 7 Page 12
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Multiplying the number of occupied room nights and the estimated number of
guest-days with the average daily rate (ADR) and average daily spending per guest,
total amount of guest spending can be estimated. Based on the 200-room hotel’s
projected ADR of $97.30 in Year 5 (assumed to be 2015) as described in Section 6 of
this report, discounted back to 2009 dollars, the ADR used for this impact analysis is
$81.50, which then translates to $74.30 for group, $96.20 for commercial, and $69.90
for leisure and other segment. In addition to lodging, it is assumed that each guest
incurs daily expenditures for recreation, transportation, meals, shopping, and other.
For the group segment, estimates for these categories of spending are derived from
a Rockford travel study by the University of Illinois at Urbana-Champaign, similar
to average daily spending of convention center attendees, and Johnson Consulting’s
experience with similar projects in comparably sized markets. These spending
amounts are adjusted slightly for commercial guests (e.g., no spending on
entertainment tickets) and leisure guests (e.g., greater recreation spending and
smaller food and beverage spending).

Table 7-10 shows the estimated average daily spending per guest, shown in 2009
dollars.

                                                  Table 7-10

            200-Room Hotel at Rockford Conference Center, Rockford, Illinois
                         Average Daily Spending per Guest (in 2009 Dollars)

                                                                                Leisure and
                                               Group               Commercial
                                                                                   Other

          Type of Spending
          Tickets/ Entertainment                   $5.70               $7.60        $14.30
          Transportation                           42.90               57.10         42.90
          Eating and Drinking                      21.30               23.40          9.40
          Lodging                                  74.30               96.20         69.90
          Shopping                                 19.00               16.20         20.90
          Other                                     8.50               12.80          8.50
             Total                              $171.70              $213.30       $165.90
          Source: University of Illinois Urbana-Champaign, Johnson Consulting



As the table shows, the estimated average daily spending for hotel guests ranges
from $165.90 to $213.30 per day, including lodging.

Table 7-11 shows the estimated economic impact of the 200-room hotel, using the
same of IMPLAN-based multiplier rates applied in the convention center impact
analysis.




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                                                    Table 7-11
               200-Room Hotel at Rockford Conference Center, Rockford, Illinois
                                Economic Impact ($Millions) - Stabilized Year

                                                 Net New to          Net New to   Net New to        Net New to
                                                    City              County         MSA              State
                                                      (a)               (b)            (c)              (d)
 Hotel
 Direct Spending                                      $10.5              $8.4           $6.3              $4.2
 Indirect Spending                                      3.6               2.8            2.0               2.3
 Induced Spending                                       4.8               3.6            2.7               2.8
   Total                                              $19.0             $14.8          $11.0              $9.3
 Personal Income                                       $4.3              $3.3           $2.4              $2.1
 Employment (in FTE)                                   153               119             88                52
 Notes:
 Column (a) represents City-wide impact from spending by all out-of-City visitors.
 Column (b) is a subset of Column (a), representing County-wide impact from spending by all out-of-County visitors.
 Column (c) is a subset of Column (b), representing State-wide impact from spending by all out-of-MSA visitors.
 Column (d) is a subset of Column (c), representing State-wide impact from spending by all out-of-State visitors.
 Source: Johnson Consulting



As shown in the table, Johnson Consulting projects that in the stabilized year of
operation, the proposed 200-room hotel is estimated to generate approximately $19
million in total direct, indirect, and induced spending, $4.3 million in earnings, and
support for the equivalent of 153 full-time jobs, all of which are net new impact to
the City of Rockford. Net new impact to Winnebago County is projected to include
approximately $14.8 million in total direct, indirect, and induced spending, $3.3
million in earnings, and 119 full-time jobs. Net new impact to the MSA is projected
to include approximately $11 million in total direct, indirect, and induced spending,
$2.4 million in earnings, and 88 full-time jobs. Net new impact to the State of Illinois
is projected to include approximately $9.3 million in total direct, indirect, and
induced spending, $2.1 million in earnings, and 52 full-time jobs.

Fiscal Impact of the Hotel

Table 7-12 summarizes the fiscal impact of the hotel from general sales tax, hotel
occupancy tax, food and beverage tax, auto rental tax, admission tax, and state
personal and corporate income tax revenues.




Rockford, Illinois                                                                                Section 7 Page 14
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                                                  Table 7-12
            200-Room Hotel at Rockford Conference Center, Rockford, Illinois
                                        Estimates of Annual Impact

                                                                                Taxable           Tax
                                                                   Rate        Spending        Revenues
                                                                                ($000's)        ($000's)

  Tax on General Retail
  State Sales Tax                                                  6.250%                             $655
  Winnebago County Public Safety                                   1.000%                              105
  Non Home Rule Sales Tax                                          1.000%                              105
    Total                                                          8.250%           $10,484           $865
  Tax on Eating/ Drinking at Restaurants and Bars
  State Sales Tax                                                  6.250%                              $82
  Winnebago County Public Safety                                   1.000%                               13
  Non Home Rule Sales Tax                                          1.000%                               13
  Redevelopment Fund (Metro) Tax                                   1.000%                               13
    Total                                                          9.250%            $1,316           $122
  Tax on Hotels/ Motels
  State Use Tax                                                     6.000%                            $202
  Redevelopment Fund (Metro) Tax                                    1.000%                              34
  Hotel Operators' Occupation Tax/ Tourism Tax                      5.000%                             169
    Total                                                          12.000%           $3,371           $405
  Tax on Auto-Rental
  Automobile Renting Tax                                           5.000%             $470             $23
  Tax on Income
  State Tax on Personal Income                                     3.000%            $2,077            $62
  State Tax on Corporate Income                                    4.800%            $1,857            $89
      Total Tax Revenues                                                                            $1,566

  Source: Illinois Department of Revenue, City of Rockford Department of Finance,
  Johnson Consulting


As the table shows, fiscal impact of the hotel is expected to amount to $1.6 million in
tax revenues, which include $865,000 of general sales tax, $122,000 in food and
beverage tax, $405,000 in hotel/ motel tax, $23,000 in auto rental tax, and $151,000 in
personal and corporate income tax.

Consolidated Impact from Convention Center and Hotel Operations

Economic and fiscal impact of the convention center and hotel as analyzed above
addresses visitor spending, i.e., spending by convention center attendees and hotel
guests only. It does not include the operating business of the convention center and
hotel themselves. Neither of these facilities existed before, so the operation of the




Rockford, Illinois                                                                            Section 7 Page 15
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convention center and hotel are by themselves new impacts to Rockford. As
discussed in Section 6, the convention center is a $2.9 million new business in
downtown Rockford (Year 5), employing 18 staff with a $1.2 million payroll. The
200-room hotel is an $8.1 million business (in Year 5), employing approximately 73
staff with approximately $2.9 million payroll. It is not a precise science to calculate
how much of these operating expenses and staff salaries will be spent and re-spent
locally in Rockford; however, at the very least the convention center and hotel
provide new, direct-employment opportunities for 91 jobs and $4.1 million payroll.
The $11 million business of the new facilities will enliven and strengthen Rockford’s
downtown area.

Summary of Impact of Convention Center and Hotel

As previously mentioned, a percentage of convention center-based room nights will
be accommodated in the 200-room hotel, and therefore are taken out from the
summarization of the combined convention center and hotel impact to avoid
double-counting. The analysis assumes that percentage to be 65 percent, i.e., 65
percent of the 24,700 convention center-related room nights, or 16,055 room nights,
will be accommodated in the 200-room hotel, while the remaining 35 percent will
fill other hotels. Therefore, the 16,055 room nights and their related impact will be
taken out from the calculation. So when one adds the combined effect of the
induced demand at the hotel and new room nights from the convention center, a net
gain of room nights is derived, as presented in the table below.

                                                  Table 7-13

                  Rockford Conference Center and Hotel, Rockford, Illinois
                                   Estimated Room Nights Generated

                                                                         # of Room
                                                                           Nights

          Conference Center-related                                         24,700
          Hotel-related                                                     40,307
          Conference Center-related that are accommodated in the Hotel     (16,055)
             Net Gain                                                      48,952

          Source: Johnson Consulting



In summary, the combined room night impact of Rockford Convention Center and
Hotel is 48,952 room nights.

Table 7-14 shows the combined economic impact of the convention center and hotel.
Economic impact related to the 16,055 room nights (that are convention center-




Rockford, Illinois                                                           Section 7 Page 16
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generated and accommodated in the 200-room hotel) is taken out from the
summation.

                                                  Table 7-14
                  Rockford Conference Center and Hotel, Rockford, Illinois
                    Estimates of Annual Gross Economic Impact (in $Millions)

                                      Conference        200-Room           (-) Double     Total
                                       Center*           Hotel**          Counting***    Impact

       Room Night Impact                    24,700            40,307          (16,055)     48,952
       Direct Spending                        $13.9            $10.5            ($4.3)      $20.1
       Indirect Spending                        4.9              3.6             (1.5)        7.1
       Induced Spending                         6.5              4.8             (2.0)        9.4
         Total                                $25.4            $19.0            ($7.7)      $36.6
       Personal Income                         $5.9                $4.3         ($1.8)         $8.4
       Employment (in FTE)                      206                 153           (62)         296
       *Impact corresponds to Column (f) in Table 7-5.
       **Impact corresponds to Column (a) in Table 7-10.
       ***Assuming that 65 percent of Conference Center-related room nights are accommodated
       in the 200-room Hotel.
       Source: Johnson Consulting



As shown on the table the convention center and hotel combined are expected to
generate economic impact that includes $36.6 million of total spending, $8.4 million
of increased earnings, and 296 jobs.

Table 7-15 shows combined fiscal impact of the convention center and hotel. Similar
to the economic impact summation, fiscal impact related to the 16,055 room nights
(that are convention center-generated and accommodated in the 200-room hotel) is
taken out from the calculation.




Rockford, Illinois                                                                        Section 7 Page 17
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                                                  Table 7-15

                  Rockford Conference Center and Hotel, Rockford, Illinois
                             Estimates of Annual Fiscal Impact (in $000's)

                                         Conference         200-Room         (-) Double      Total
                                          Center*            Hotel**        Counting***     Impact

   General Sales Tax                              $785              $865          ($352)       $1,299
   Food and Beverage Tax                           351               122            (49)          424
   Hotel/Motel Tax                                 247               413           (174)          486
   Auto Rental Tax                                  28                23             (9)           42
   State Personal Income Tax                       176                62            (25)          213
   State Corporate Income Tax                      243                89            (36)          296
      Total                                     $1,831             $1,575         ($645)       $2,760

   *Corresponds to Total Column in Table 7-6.
   **Corresponds to Total Column in Table 7-11.
   ***Assuming that 65 percent of Conference Center-related room nights are accommodated
   in the 200-room Hotel.
   Source: Johnson Consulting



As the table shows, fiscal impact of the convention center and hotel, combined, is
expected to amount to $2.8 million in tax revenues, which include $1.3 million of
general sales tax, $424,000 in food and beverage tax, $486,000 in hotel/motel tax,
$42,000 in auto rental tax, and $509,000 in personal and corporate income tax.

Again, this economic and fiscal impact is over and above the operating business of
the convention center and hotel, which provides 91 jobs for $4.1 million payroll and
is approximately $11 million operation, annually.

The city/county is likely to incur expenses related to providing services to the
improved facilities that are not estimated in this analysis. These expenses include
police, fire protection, emergency medical services, traffic control, street
maintenance, sanitation, and other ongoing operating expenses required to
maintain the environment around the facility. While many of these costs are
charged back to facility users, inevitably these costs would, to some extent, decrease
the overall fiscal benefit to the public sector.




Rockford, Illinois                                                                         Section 7 Page 18
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Peoria Civic Center, Peoria, Illinois

The Peoria Civic Center (PCC) is located in Central Illinois about 3 hours from both
Chicago and St. Louis. The PCC opened in 1982. It is an SMG managed building.
The facilities at the Peoria Civic Center include an arena, theater, exhibit hall, and
meeting space. Only the exhibit hall and meeting space will be discussed in this
analysis. The Peoria Civic Center recently under went a $55 million expansion and
upgrade in order to meeting growing demand for the facility.

Downtown Peoria is also enjoying an urban renewal, not only from the recent PCC
renovation, but also from the ever-growing, vibrant riverfront featuring live
entertainment, dining, shopping, and a network of riverfront trails, as well as the
$400 million Interstate 74 upgrade which has made Peoria much more accessible.
Peoria has only 800 hotel rooms in the area, a lively restaurant scene, and a growing
museum inventory, including the Children’s Museum, a Caterpillar Construction
visitor center, and the $100 million museum project.

Table 1 summarizes the PCC’s various function spaces and capacities.




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                                                      Table 1
                                              Peoria Civic Center
                                 Summary of Exhibit and Meeting Space
                                                    Size (SF)               Capacity (# of Persons)
                                             Individual   Combined
                                                                         Theater   Classroom   Banquet
                                             (Smallest)   (Largest)

 Exhibit Hall
 Exhibit Hall                                        -      108,668       12,405      7,166        6,912
 A                                              18,681            -        2,125      1,235        1,240
 B                                              13,953            -        1,585        920          912
 C                                              31,034            -        3,555      2,046        2,000
 D                                              45,000                     5,140      2,966        2,912
     Subtotal Exhibit SF                                    108,668
 Ballroom
 Number of Rooms                                      9              1
 Smallest Room                                    1,800              -       252        132          100
 Largest Room                            -                      26,550     2,880      1,656        1,550
     Subtotal Ballroom SF                                       26,550
 Meeting Rooms
 Number of Rooms                                    16              11
 Smallest Room                                     490               -        63         36            40
 Largest Room                                        -           7,289     1,000        417           408
     Subtotal Meeting Room SF                                   17,363
 Total                                                      152,581

 Source: Peoria Civic Center , mpoint.com, Johnson Consulting



The exhibit hall has a total 0f 108,668 square feet and a 12,405-person capacity for
theater events, 7,166-person capacity for classroom events, and a 6,912-person
capacity for banquet events. The exhibit hall can be divided into four different
sections. Exhibit hall A has 18,681 square feet, exhibit hall B has 13,953 square feet,
Exhibit hall C has 31,034 square feet, and Exhibit hall D has 45,000 square feet.

The new ballroom space at PCC totals 26,550 square feet and has the ability to be
split into nine different ballroom areas. The smallest of the nine ballroom sections is
1,800 square feet and has a capacity ranging from 100 to 252 people. In its full
configuration, the ballroom can host from 1,550 to 2,880 guests. Meeting space at the
Peoria Civic Center consists of 16 individual rooms or 11 combined rooms. The
smallest room is 490 square feet and the largest meeting room is 7,289 square feet.
There is a total of 17,363 square feet of meeting space.

Table 2 following, presents the demand calendar for the PCC.




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                                                    Table 2
                    Peoria Civic Center Demand Summary by Event Type - 2007

                                                                         Total    Average
         Event Type                                     # of Events
                                                                      Attendance Event Size
         Convention/Tradeshows/Consumer
         Shows                                                  122     133,069          1,091
         Banquets                                                67      17,292            258
         Meetings                                               147      18,901            129
         Community Events                                        20      25,764          1,288
         Other                                                   28      33,945          1,212
           Total                                                384     228,971            596

         Source: C.H. Johnson Consulting, Inc.



In 2007, the Peoria Civic Center had 384 events and hosted 228,971 visitors. The
average event attendance was 596 people. There were 122 conventions, trade shows,
and consumer shows with total annual attendance of 133,069. There were 67
banquet events with attendance of 17,292 people, 147 meeting events with 18,901
people, 20 community events with 25,764 people, and 28 other types of events with
33,945 people.

Table 3 provides the corresponding revenue and expense statement.

                                                    Table 3
                      Peoria Civic Center - Revenue and Expense Profile
                                                                                       2007
    Facility Revenues
       Facility Rental                                                                   $790,355
       Service Income                                                                     572,335
       Catering Sales                                                                   1,227,156
       Food & Beverage Sales                                                              122,418
    Total Revenues                                                                     $2,712,263
    Expenses*
     Service Expenses                                                                    $404,715
     Catering Expense                                                                   1,030,425
     Food & Beverage Expenses                                                              79,846
    Total Event Expenses                                                               $1,514,987
    Net Event Income (Deficit)                                                        $1,197,277
    *Salaries, Wages, and other operating expenses are NOT included
    Source: Johnson Consulting


The above revenue and expense statement is only for convention and meeting type
events; no arena or theater revenues or expenses are included. The table also does




Rockford, Illinois                                                                (Peoria Addenda) Page 3
Convention Center and Hotel Feasibility Analysis                                             January 2010
C.H. JOHNSON CONSULTING, INC.
      EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




not include management operating expenses. In 2007 facility rental generated
$790,355 in income, $572,335 in service income, $1.22 million in catering revenue,
and $122,418 in food and beverage sales, which made total event revenue $2.17
million.

There are three main expense categories -- service expenses, catering expenses, and
food and beverage expenses. Service expenses totaled $404,715, catering expenses
were $1.03 million, and food and beverage expenses were $79,846. Total event
expenses were $1.51 million, which made a total net event income of $1.20 million
for 2007.




Rockford, Illinois                                              (Peoria Addenda) Page 4
Convention Center and Hotel Feasibility Analysis                           January 2010
C.H. JOHNSON CONSULTING, INC.
     EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING




COMMUNITY REINVESTMENT & ITS IMPACT
As part of C.H. Johnson Consulting’s effort to determine the feasibility of a new
conference center and hotel, the study has analyzed the merits of community
investment in such a project. Rockford, Illinois has been on a slow but steady
economic decline and has unemployment and poverty rates above the national
average. Communities that are facing similar challenges react in a variety of ways
but have two very direct choices to make.

1. Make long-term investments in projects that will strengthen and improve local
economic conditions and foster additional investment in the community, or

2. Continue with the status quo and let economic conditions continue to worsen.

Communities across the country often undertake a convention center project as a
way to increase local employment and spending, increase tax revenues generated
by non-local visitors, and attract outside investment in the community. Such outside
investments may include money for new hotels, corporate headquarters, and other
meaningful community investments, and an improved tourism infrastructure base
to better market the area. If the community as a whole decides the Rockford
Conference Center and hotel development is a meaningful project to invest in, the
project will have a substantial positive impact on the local community by creating
new jobs caused by the construction of the facility, as well as 300 full-time jobs that
are directly attributable to the conference center, hotel, and businesses that support
both. Increased and new spending and tax revenues will be generated as projected
in the tables below.




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Conference Center Analysis                                                                              Page 2
Rockford, Illinois




                                                 Table 1

                Rockford Conference Center and Hotel, Rockford, Illinois
                           Estimates of Annual Fiscal Impact (in $000's)

                                      Conference        200-Room         (-) Double          Total
                                       Center*           Hotel**        Counting***         Impact

   General Sales Tax                           $785             $865            ($352)         $1,299
   Food and Beverage Tax                        351              122              (49)            424
   Hotel/Motel Tax                              247              413             (174)            486
   Auto Rental Tax                               28               23               (9)             42
   State Personal Income Tax                    176               62              (25)            213
   State Corporate Income Tax                   243               89              (36)            296
     Total                                   $1,831           $1,575            ($645)         $2,760

   *Corresponds to Total Column in Table 7-6.
   **Corresponds to Total Column in Table 7-11.
   ***Assuming that 65 percent of Conference Center-related room nights are accommodated
   in the 200-room Hotel.
   Source: Johnson Consulting



                                                 Table 2

                 Rockford Conference Center and Hotel, Rockford, Illinois
                   Estimates of Annual Gross Economic Impact (in $Millions)

                                   Conference         200-Room        (-) Double          Total
                                    Center*            Hotel**       Counting***         Impact

      Room Night Impact                  24,700           40,307          (16,055)         48,952
      Direct Spending                      $13.9           $10.5             ($4.3)          $20.1
      Indirect Spending                      4.9             3.6              (1.5)            7.1
      Induced Spending                       6.5             4.8              (2.0)            9.4
        Total                              $25.4           $19.0             ($7.7)          $36.6
      Personal Income                       $5.9             $4.3            ($1.8)           $8.4
      Employment (in FTE)                    206             153               (62)           296
      *Impact corresponds to Column (f) in Table 7-5.
      **Impact corresponds to Column (a) in Table 7-10.
      ***Assuming that 65 percent of Conference Center-related room nights are accommodated
      in the 200-room Hotel.
      Source: Johnson Consulting



In total, there will be $2.8 million in new annual fiscal impacts caused by both the
convention center and hotel, in addition to $36.6 million in new spending. Johnson
Consulting strongly believes that the conference center and hotel project are viable
and worthy of community investment as a means of economic development and job




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Conference Center Analysis                                                                             Page 3
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creation. By reinvesting a portion of the impacts generated by the project into the
development and upkeep of the conference facility, there will be long-term
economic benefits for the community. The paragraphs below profile the process that
Dubuque, Iowa has undertaken to improve its downtown area and create new jobs
for the local community.

Dubuque, Iowa – A Case Study in Successful Downtown
Redevelopment

As similarly experienced in Rockford, the 1960s and 1970s brought about a period of
business migration from the downtown Dubuque core to newer developments in
the outlying areas of the City and County. As a result, this decimated downtown
building occupancy and led to the loss of businesses as well as anchor department
stores, creating double digit unemployment.

In order to counteract the negative impacts of this business migration and to attract
new economic development and business back to the downtown area, local
property owners, store owners, the city, and other local groups organized a
coordinating committee in 1984 and used a Main Street redevelopment program as
the vehicle for change. Subsequently, Dubuque was chosen by the National Trust’s
Demonstration Program for the Urban Main Street Redevelopment Program which
helped focus attention and resources into the area.

Simultaneous to the Main Street Redevelopment effort, the Dubuque County
Historical Society launched the America’s River project with the goal of
redeveloping the riverfront, which was once the commercial heart of the city but
was plagued with environmental issues, undervalued property, and heavy
industrial infrastructure. The first phase of the America’s River project had five
anchor components:

            The Mississippi River Walk

            The National Mississippi River Museum and Aquarium

            The Grand River Center

            The Grand Harbor resort

            The Star Brewery

The America’s River Project had the goal of raising $25 million for this effort. That
goal was exceeded and the project also received a $40 million Vision Iowa grant; in
total over $188 million dollars have been invested in the America’s River project.




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Conference Center Analysis                                                                             Page 4
Rockford, Illinois




When the Main Street and America’s River projects are viewed together, over $500
million dollars of public and private money has been invested in downtown
economic redevelopment efforts.

The City of Dubuque has continued to build on these efforts by attracting IBM and
other large corporations to downtown, the adoption of a 2010 Downtown Master
Plan, modifying regulations to support increased business activity, and a variety of
other initiatives to promote continued downtown development.

Rockford has a lot of similarities to Dubuque in the late 1980s. Rockford has several
advantages over Dubuque which include:

            Access to the Chicago, Milwaukee, and Madison markets,

            Multiple international airports in close proximity,

            A growing aerospace industry, and

            Land available for redevelopment downtown.

In order for Rockford to turn the corner and spur new economic growth, the city,
county, and other stakeholders, need to leverage the above factors, and determine
the most appropriate way to foster new downtown development. One of those
options is to support a new conference center and hotel which will provide a
tremendous amount of gravity towards redevelopment and spur economic
recovery.




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