Archive for Monday, October 29, 2001

City lacks tool to monitor property supply

October 29, 2001


Mayor Mike Rundle suspects the city has too much commercial property. But he would like to know for sure.

Horizon 2020, the city-county long-range planning guide, calls for development of a tool to monitor the commercial space supply. Rundle says it would help commissioners better decide whether new developments like the big-box proposals approved in recent weeks help or hurt the city.

But despite the Horizon 2020 mandate, there's still no official way of knowing; the city has never approved a monitoring tool. Rundle said that leaves commissioners blind.

"Let's quit shooting from the hip on (how a new business will) impact on sales taxes and property taxes and how it will affect other stores," Rundle said Tuesday during a debate on a proposed home improvement store at Sixth Street and Wakarusa Drive. "Let's get these tools."

Others say the free market works better than any analysis ever could.

"The market has a remarkable way of sensing when there's an oversupply or an undersupply," said Ron Durflinger, chairman of the Lawrence-Douglas County Planning Commission.

The following policies come from the city-county long-range plan:Policy 1.6: Maintain an appropriate supply of commercially zoned land so that site choices are available and infrastructure can occur in an efficient and orderly manner. Annually evaluate current and approve land uses and land availability.Policy 1.7: Develop a technique to monitor gross leasable area of commercial developments within the community and formulate a method to evaluate the need to pursue or (limit) the capacity of the community to accommodate additional commercial development.

The two sides disagree whether Lawrence has too much commercial property. They disagree about the consequences. And they disagree about the role government should have in controlling it.

A 'pipe wrench'

The creators of Horizon 2020 apparently thought the government should have some power. One of its policies directs planners to "formulate a method to evaluate the need to pursue or (limit) the capacity of the community to accommodate additional commercial development."

An attempt was made. Kirk McClure, an associate professor of planning at Kansas University, developed a model that would determine the city's capacity to absorb new commercial properties by looking at how much sales tax the existing properties were generating.

"The amount of space we can support is dependent on the amount of retail dollars we're spending in Lawrence," McClure said.

In December 1999, the planning commission unanimously rejected the proposal.

"To me, it's a lot like using a pipe wrench to cut glass," Durflinger said at the time. "It may get the job done, but it's not going to be very pretty."

The problem, Durflinger said, was that the sales tax data available at the time wasn't available by category so commissioners could look at different types of commercial developments. And much of the data, he said, wasn't public record, making it hard for the public to contest a finding.

The planning commission told city planners to look for another tool, but little progress has been made. A suggestion in January to create a business licensing system as a tool died a quick death when local merchants found out about it.

Planners, then, often use market analysis provided by the developers.

"I don't think we've received a retail market study that says the property couldn't be absorbed by the city," said Bryan Dyer, a city planner.

Questioned at public meetings, planners say they need their own tool.

"It's a frequently asked question by elected and appointed officials, as well as the general public," Dyer said. "How much is too much? Do we have room for more?"

Too much?

Some observers say that there's anecdotal evidence Lawrence has too much commercial property: It's per capita commercial square footage is triple the national average, according to planners; city officials say sales tax collections are flat; and a number of new and old commercial developments in town have vacancy signs planners keep a stack of photographs documenting those vacancies.

McClure points to the struggles of Tanger and Riverfront malls during the 1990s as proof of an overbuilt commercial sector.

"You expect to see those signs in bad times," he said. "But we're coming off eight or nine years of economic growth."

He said continued overbuilding, if it's really happening, could blight existing commercial areas.

"You think 23rd Street is ugly now, wait till you see it with 50 percent vacancy," McClure said.

Marilyn Bittenbender, a sales associate with Ellis & Grubb/The Winbury Group, said that there can be benefits when there's too much commercial space.

"When we get a little bit overbuilt, we see rent start to drop a little bit, and that's probably a healthy thing because it lets tenants move and grow and spend money on jobs instead of overhead," she said. "When we artificially place limits on that based on some criteria, we don't have the opportunity to have some of those cycles."

Durflinger said that the number of vacancy rates matters less than the types of vacancies. Some buildings just aren't suitable to needed purposes, he said, but that shouldn't preclude new buildings for other purposes.

All sides say an analysis of commercial space would be just one factor in approving new developments; it wouldn't be a determining factor. A consultant will meet with planning commissioners Nov. 7 to talk about commercial planning, including the creation of the analysis.

It might be difficult to find a tool that doesn't give an unfair or inaccurate picture. No other cities in the Midwest do anything similar, planners say.

"That doesn't mean it shouldn't be done," Dyer said.

But it's a reason not to do it too quickly, Durflinger said.

"The important thing is we find a tool, not a weapon," he said. "In this case, no tool is better than a bad tool."

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