American Eagle Outfitters Inc. is abandoning plans for a new $45 million warehouse and distribution center in Lawrence a project that would have been the largest private economic development investment in Douglas County history.
Instead, American Eagle will land in Franklin County, at a $6.5 million former hardware distribution center in Ottawa, officials said Saturday.
" There is still going to be a boom for the northeast Kansas economy." Bill Sepic, president and chief executive officer of the Lawrence Chamber of Commerce
The company is buying the vacant Our Own Hardware building instead of developing an 87.7-acre farm field east of Lawrence's East Hills Business Park.
"If I was in Lawrence's situation and worked hard to recruit a business and thought it was set in stone, and then they decided to leave, you would be disappointed," said Richard Jackson, Ottawa mayor. "That goes without saying."
The Ottawa City Commission will discuss a tax abatement request from American Eagle during a study session Monday afternoon, nearly eight months after the national clothing retailer announced its decision to build in Lawrence.
The company's new site is located in the Northeast Ottawa Industrial Park, where American Eagle plans to add about 100,000 square feet to a 289,200-square-foot building that had been listed for sale at $6.5 million.
In Lawrence, economic development officials were trying to put a positive face on the big loss.
"We're certainly disappointed that it's chosen not to locate in Lawrence, but we're thrilled to death that it's decided to remain in northeast Kansas," said Bill Sepic, president and chief executive officer of the Lawrence Chamber of Commerce. "They're still looking for up to 300 employees, and I don't think they'll be able to attract 300 just from Ottawa. There is still going to be a boom for the northeast Kansas economy."
American Eagle officials were unavailable for comment.
In March, company officials came to Lawrence to announce plans for their first distribution center outside Warrendale, Pa.
The project was to cost $45 million, cover 402,000 square feet and open in May 2001 with 150 employees. Another 150 workers were expected within three years.
But regulatory delays in Lawrence involving zoning, drainage and other issues ruffled feathers at American Eagle's headquarters. Opponents also objected to the transformation of fertile farm land into an industrial area.
In recent weeks, Lawrence city officials and company representatives had exchanged revisions on the project's site plan even as company officials flew into Lawrence Municipal Airport on the way to Ottawa for discussions about the new site.
American Eagle representatives are scheduled to appear Monday in Ottawa for a study session with commissioners. The company wants a 50 percent tax abatement for 10 years on the building, plus a 100 percent tax break for 10 years on its planned expansion.
"That's pretty standard," Jackson said. "I couldn't see any reason why the commission would reject it. Obviously, we have a building that is vacant, and we've been looking for someone to occupy it for some time (two years). The jobs the number of jobs certainly are needed in this community. And I think the wages would be adequate."
The center is expected to offer part-time jobs with wages of $8.50 an hour. Jackson said that would be "competitive" in Ottawa, a market that includes a Wal-Mart distribution center with 1,250 employees 3 miles north of town.
Those same wages drew criticism in Lawrence, where American Eagle was granted an 80 percent abatement for 10 years a decision also helped spawn a drive to require a "living wage." Organizers of the campaign want the Lawrence City Commission to require companies receiving tax breaks to pay workers a yet-to-be-determined "living" wage, which would be more than the current federal minimum of $5.15 an hour.
Jackson doesn't hear the same rumblings in his city.
"That's Lawrence, and this is Ottawa," he said. "You have to take each project on its own merits."
Sepic said American Eagle's decision to turn its attention to Ottawa likely rested on bottom-line economic reasons, not public opposition.
"Certainly delays in the project and negativism provided the company opportunity to continue to look," said Sepic, who plans to meet with American Eagle representatives Monday. "But we're looking at this not as a time to try to speculate on what was done right and what was done wrong on the process. We're just very pleased it's going to stay in this area."
American Eagle's decision means that the 87.7-acre field directly east of the East Hills Business Park is available for development. The site is owned by Douglas County Development Inc., which markets the park on behalf of the city of Lawrence, Douglas County and the chamber of commerce.
American Eagle never signed a contract to buy the property, which DCDI acquired for $2,500 an acre.
"It does happen to be the largest contiguous property that we have available in Douglas County for economic development," Sepic said. "We're very positive about it and its potential for economic development."
American Eagle, meanwhile, continues work on a much smaller project in Lawrence.
The company plans to open a retail store in January at 619 Mass., inside a former toy shop currently being renovated. American Eagle has signed a 10-year lease for the space.