Developing from 6:35 p.m. city commission meeting. We'll see what the public has to tell commissioners about the Deciphera deal, and how City Hall decides to proceed on the Oread Inn proposal. Check back throughout the evening for Chad Lawhorn's coverage of the event.
6:33 p.m. Hi. The meeting is set to begin in a few minutes. We'll start offering our online report as soon as the discussion on Deciphera begins. Commissioners have a couple of recognitions and a consent agenda to deal with before the begin the Deciphera discussion. Check back near 6:45 p.m.
6:56 p.m. City commissioners are still on the consent agenda. They should be just a couple minutes away from starting the Deciphera discussion.
6:58 City commissioners are now taking up the item. Mayor Hack says she will abstain from conversation and vote because of her financial interest in the company. She leaves the commission meeting room.
City manager David Corliss said he does not believe there was adequete briefing or adequete public discussion about the tax rebate portion of this agreement. One of the "guiding lights" of the commission discussion is that the city's financial commitment is the same as it was in an agreement the city approved on Jan. 2 for that East Hills Business Park building on Jan. 2. "As we have discussed this, that has been a very important aspect."
Corliss continues. He said the new agreement is viewed "more favorable" than the previous agreement. Said the fact that Deciphera would own the building was an important point. Said several of the incentives are tied to employment goals. "There will be no discussion at this diaz or any other diaz about whetehr the company is in substantial compliance." He said it is very clear that the company won't receive the incentive if it doesn't reach the employment levels. Said that if the Kansas Bioscience Authority owned the building rather than Deciphera, there would be no property taxes paid on that building. "That was a concern to the city."
Corliss continues. On the quality of Deciphera as a company, he notes that the Kansas Bioscience Authority has spoken with its own money by agreeing to invest in the building as well. Says the agreement of Jan. 2 was on the city's regular agenda. there was a public discussion. Members of the public had the opportunity but did not make any comments. The incentive package to KBA did not go through the public incentives review process.
Corliss continues. He said that the company became interested in buying the building instead of leasing it. Corliss reads from a Deciphera letter that says the company is out of space, has a $2 million payroll, the average salary is $72,000 per year, and the lowest paid employee makes $15 per hour, which is above the living wage of just under $11 per hour.
Corliss continues. "Deciphera wants to stay in Lawrence and I think this is the right incentive package to keep them here," Corliss goes into more detail on the agreement. He says the employment awards to Deciphera will not be awarded if the employees aren't met. $156,000 is approximately the total amount of money that the city would pay in employment awards. That is if they grow to 200 employees. "If they grow to 200 employees, they will be among the top 20 employers in this community."
Corliss continues. On the tax refund portion. He said that the company will only receive the tax refund if it meets certain employment levels. Says the building currently pays about $88,000 in property taxes. "We want the company to grow. We want them to outfit the entire building." He said the tax refund program does not impact the school district. School district will get its portion of the property tax bill. Corliss said that he estimates the most the city will have to pay in a single year is $15,000 for the tax refund. The other partners, such as the county, will also pay additional money for the tax refund. "We think this is an exciting company, an exciting industry that capatilizes on some of this community's strengths."
Corliss continues. He said that under the previous agreement none of the incentives were tied to employment levels. "It could have been that the building would have been outfitted and no employment in the building and we still would have been obligated to pay for the incentives." Says it is important to remember that the Kansas Bioscience Authority under the previous agreement likely would not have had to pay tax on the building.
City attorney Jerry Cooley will speak about the city's legal authority to participate in the tax refund. He said we're dealing with a city ordinance. It is the portion of the city ordinance that talks about Industrial Revenue Bonds and other public subsidies. He reads from the ordinance. Says public subsidy below $100,000 shall not have to comply with the provisions of the ordinance. "Fact is, it has been called a mere technicality, but there has not been a tax abatement for Deciphera. It may be a technicality, but as lawyers and judges we deal with technicalties that are the law. This is not a tax abatement. It is simply a tax refund." Says the total amount that would go to Deciphera in total would be about $77,000 per year. "The figures clearly show that Deciphera at the maxium would receive $77,500 per annum." That is less than $100,000. That means the public subsidy ordinance of the city doesn't apply. "If this business is successful in 10 years, the full load of the property tax will be paid by the business."
Lavern Squier, president and CEO of the Chamber is now speaking. City, county, Lawrence Douglas County Bioscience Authority and Douglas County Development Inc. are the members of the local group offering the incentives. Begins speaking about Deciphera. "They are great jobs. They are the jobs we have talked about and have aspired to. They are high paying jobs."
Squier continues. Points out that the company has 26 full time equivalant employees. It includes three full time consultants on site. He emphasizes that the company currently is out of space. Company says absent the incentives it would have an "obligation" to look outside of Lawrence. "I think that is key," Squier said.
Squier continues. "this deal is about retaining a great small company in our community that has great potential." Says KBA has called Deciphera the best bioscience opportunity in the state of Kansas. Points out that KBA is investing dollar for dollar in the company. Notes that technically all the city money is going to the Lawrence Bioscience Authority. The Bioscience Authority will pay Deciphera and the KBA. Also highlights that the contract is strongly tied to the performance of the company.
City Commissioner Boog Highberger asks whether the city will address conflict of interest issues.
Cooley. "My advice as your attorney is to let that play out by the Attorney General. I don't think this is the appropriate place to discuss it." This issue of potential conflict of interst is being investigaged by the Attorney General's office.
Corliss said he will talk about how the issue was put on the consent agenda originally. Says the agreements were in the packet. "The information was there but the comprehensive explanation was not."
Highberger. I will take you up on your offer of how this ended up on the consent agenda.
Corliss. Lavern suggested it be on the consent agenda, but it was my decision to put it on the consent agenda. I saw it as a continuation of what had been approved in Janauary. Had a strong desire to keep items off of the Oct. 23 agenda because there was an agenda item ont he South Lawrene Trafficway on that evening. "These are reasons, not excuses." Highberger asked for it to be on the regualra agenda. "I think that is where it should have been all along, in retrospect."
Corliss continues. Said at the time of the Jan. agreement it was hoped that Deciphera would be the anchor tenant, but had no agreement that it would be.
Lavern Squier explains that Clay Blair once was assigned to the project for the KBA and that Tom Thornton then took over from Blair for the KBA and there was a transition period. Squier gives some background on the Kansas Bioscience Authority and the Lawrence-Douglas County Bioscience Authority. Says that KU has said lack of bioscience incubation was one of the greater issues facing the city's economic development efforts.
Cooley explains the $100,000 exemption in more detail at the request of Comm. Rob Chestnut.
Comm Chestnut continues. Clarifies that the original agreement was all the money was going to the KBA. It was not going to a private business.
7:51 p.m. Public comment begins. David Smith of Grassroots action. "At first glance, second glance and third glance this could appear to be complicated. But when you scrape away the detail, the discussion that led to this decision took place behind closed doors. That is wrong. It is a violationof public trust." "Public policy is supposed to be discussed in front of the public. City commissioners are obliged to live up to that princple." "The attempt to explain tonight the reasoning is somewhat admirable, but the attempt to explain does not equal a remedy." The remedy he said is to rescind the "mistaken decision." "Decisions made behind closed doors should not stand." Calls on the city to rescind the decision. Says on the argument that this was a continuation of the Janaury agreement. "I would like to express some skeptcims of that." "The rebate was being given to a private firm. That was never mentioned in Janaury. That is a huge difference in a community that has long discussed tax abatements." Also, since January, the city has been coping with a serious budget shortfall.
Smith continues. Reminds about 2 dozen of the city's social service agencies had their budgets cut. "Am I saying the decision is wrong. I'm saying it hasn't been discussed," Smith said of the Deciphera deal. "I'm not standing here to contraticd the claims about Deciphera. But the city has a process." Says it should have been sent to the Public Incentives Review Committee. Says it needs a formal, scientific, unbiased review of the incentives package. Again asks for the city to rescind the deal and put it through the typical review process.
Gwen Klingenberg, member of Grassroots Action. "Have a grave concern about the precedent this is setting." "You did not invite the community to this discussion." Says city will refund money that is taxpayer money. County will refund money that is tax payer money. Says Lawrence Douglas County Bioscience Authority will refund money that was provided to them by city and county. "You did not think taxpayers were stakeholders in this discussion." Says it sets a precedent that commission has the right to use our money as how you choose, she said. "Taxpayers were not part of the team that Mr. Squier so proudly talked about," she said referring to previous comments by Squier. "There was a war fought for the right to be involved in how our taxes are spent." "There is never a time a place or business so special to ignore the process. It is never appropriate to preach to the citizens your excuses for ignoring the processes."
Louise Hanson. Says setting tax policy in closed meetings "where the citizens can't see" is the worst part about this deal. Says the entire commission has dropped the ball on this issue. "The answer to this problem is obvious. Right the wrong. Only that action will restore the public's trust in city government."
Kirk McClure, a memer of the Public Incentives Review Commission. "Our problem is not with the company. It is with the failure of leadership." Says that Chamber should not have beeninvolved in the executive sessions because they are an advocate for business, not the taxpayer. Says Mayor Hack should not have been in the room because she has an ownership interest in the city. Says that makes the city's reason for conducting the meeting in closed session bogus because she is an owner of the company and thus the information was kept confidential between the city and its attorney. "the only people left out of the meeting, it seems was the taxpayers. This is a crisis in leadership." Says the city's record with tax abatements has not been particullary impressive lately. Says the staff memo leaves many questions unanswered. Examples. How was purchase price determined? What was the history of the building? Did the taxpayers help pay for that building already? Wants to know whether there really was a threat of the company to leave Lawrence. Says it seems that "We have a problem here and it has to do with the leadership of oru economic development." "No one is questioning this firm." "We have become the laughing stock of economic development in the Midwest."
Laura Routh, Lawrence citizen. "I'm really disturbed by what has gone on with this. violation of open meeting laws, backroom votes. failure to file substantial interest forms. Taht is so egregious that it takes my breath away." "What is worse it seems that the city commission, staff, body politic is suprised that this is being questioned by the public. . . . Frankly that is really insulting. That is our job. It is oru money. I fear that the city has forgotten that it is our money that is being given away." "The deal that has been drafted may be a great deal for the city. But I don't know, we weren't privy to it." "But the manner that it was crafted was unconsciouble. It has spoiled it for me. It just looks rotten." "Individual commissioners who have vested financial interest in a company should not be participating in a process. That is wrong." "I hope we can look at this an opportunity to look at how we award financial incentives."
Patricia Sinclair. Says she has questions about the legal structure of Deciphera. Says it is no longer a corporation but rather a LLC. Her concerns with that are that LLCs generally do not issue stock. Investors are called members and their identity is a secret. "If you want to know who owns Deciphera, good luck. They don't have to tell you." Questions how an LLC must pay income taxes. Thinks they don't pay corporate income taxes, but rather the members pay it as part of their personal income taxes. Asks if it is advantagous to the city to do business with an LLC versus a corporation. Wants to give a couple of name about historically who this group has been. Says the company says it has a board of directors. Doesn't think LLCs have board of directors. Thinks Mr. Flynn, president of Deciphera, was associated with Millenium Pharmacuticals. Says Deciphera also was organized under Biochenomix. Hasn't been able to find information about that organization as well. Thinks it would be a sign of "good faith" for the company to disclose its full ownership.
David Holroyd. Talks about mid 1980s and the creation of the East Hills Business Park. Says it was created by good people who cared about the community. "this town has gotten greedy." "Something needs to be done." Wants to know how many of these employees of Deciphera will actually live here.
Unindentified speaker. Says the mayor should be here. She has had to recuse herself on other matters and she has stayed in the room. "She doesn't want to face us."
A. Hanson. Asks whether the city honestly believes it is doing its responbility by deciding public policy in private.
Hilda Enoch. "I think you went about it wrong. I think the mayor went about it wrong, but I think your intentions were good. You neglected to bring the people along with you. That is why people are understandbly upset. But I think it is a good program. It is something that would keep our kids here. But you have kind of pulled the rug out from under us."
8:31 public comment ends. Highberger asks for a response on the LLC. Corliss said he doesn't think it impacts the city's contract.
Highberger. "I apologize. I screwed up. I did not fulfill my responsiblities as a commissioner." "When it did not get a full presentation at the Oct. 23 meeting, i didn't ask the questions and demand that it get a full explanation." Wants to discuss conflict of interest and other issues but have been advised by attorney not to do so. Reason he voted for it in the first place was because it was the same amount of money as it was before. Thinks this should have been sent to the Public Incentives Review Committee but doesn't think it was required to be done under city law. Not ready to rescind the agreement. But does want the PIRC to review it and holds open the possibility of rescending it.
Comm. Mike Amyx: Said he has been dealing with the issue for a long time. Importance of bioscience industry for years to come. Was important to have a facility to attract biosciences companies. "As commissioner Highberger said, I'm not ready to rescind anything." "One of the things I want to tell members of the public, is that taxpayers are always part of everything that happens." "A lot of the comments over the last few weeks has been who are we going to blame. Folks you can blame me. I will accept it. Of the four members of the Lawrence city commission, i have more time on this body than others. I consider myself the senior member. Let me tell you about Comm. Highberger. he is the most honest person I think I have ever met. My two collegaues on either side of me (Chestnut and Dever) are a little new. They don't have the experience that I have." He talks about how there is a lot of information to take in with each city commission meeting. "When Oct. 23 happened, he asked if any members of the commission had any questions. I guess it was one of the few times in my life ... that I didn't have questions. I believed my questions had been answered,a nd I really believe the taxpayers interests had been met." Again says he will take the blame. Wants to talk about the company. "This company is doing some incredible work." Says this is an excellent company that was worthy of the investment.
Comm. Chestnut. "I don't think I should take a free pass on this. I obviously think there needs to be process improvements." He thinks a public discussion should have a discussion about when executive sessions should be held by the city commission. "That is probably an agenda item we should have going forward." "There is no doubt there needs to be a very broad discussion . . . about public incentives." Says the community is starting to move into other areas besides tax abatements. Examples are TIFs, Transportation Develpment Districts and other incentives. Says he agrees that the community needs to "get its hands around" how to do cost benefit analysis of these new incentives. "One thing I have learned as a young commissioner is that ambiguity invites suspicion. That is what has happened here. That's unfortnate because I think this company can really benefit this community." Talks about the good of a company working to cure cancer. Mentions that he lost his father to cancer. On the issue of process: "Moving forward we have to work on that." On the deal, he said he was working on a reasonable assumption that this was an extension of the January deal. "I think this is a great opportnity. I like the idea that the company is willing to step in and buy the building." "I can't stress enough the need for process improvement." Says he has no "inkling" of wanting to rescind this.
Comm. Dever. "I made a big mistake by not asking this to be a seperte agenda item. I did not understand how big of an issue it would be." "I know trust is earned. It is not given. I apologize for anything I or fellow commissioners have done to damage that trust. I want to regain that trusts." "Our intentions are all good here. We do this to help our citizens and our community. It is difficult for me to be accused of doing anything other," Dever said as his voice broke slightly. "This is not easy, but I believe we have two options here. We could rescind the vote and put it through the public process that it deserved. If it means gaining back the public trust, I would be willing to rescind this vote." "I'm very cocnerned about some of the comments made about commissioners here. If you only knew the work that people put into this, I think you would rethink some of those comments."
Dever asks for discussion on rescinding the vote. Highberger said he first wants to make some additional comments. Thinks that a lot of this could have been avoided with economic development planner. Thinks city ought to consider hiring one. He also said he "welcomes" the investigation by the attorney general. Instead he wants to wait for the attorney general findings and also refer it to the public incentives review committee for comment.
Chestnut asks for clarification on how a PIRC review would work. Corliss explains who is on the PIRC committee. Says it reviews a cost-benefit analysis that is prepared by a Kansas University research organization. PIRC provides a recommendation to the city commission.
Amyx asks if the building has been bought already by Deciphera. Corliss says he is not sure. As of yesterday, he did not believe Deciphera had signed the agreements. Amyx said he doesn't want to send it to PIRC while it is being investigated by the Attorney General. But he may be open to revisting the issue based on what the Attorney General finds.
Highberger's motion dies for a lack of a second.
Commissioners end their discussion. They take a 15 minute break.
9:40 p.m. The Oread Inn discussion now begins. Lynne Zollner, historic resources administrator for the city, explains that this project has undergone a historic resources review. She provides background for the commissioners on what is involved in a historic resources review. Project includes demolition of existing structures on the site. the property is within 500 feet of the Hancock Historic District and 500 feet of the Oread Historic District. That requires this project be reviewed by the Historic Resources Commission.
Zollner continues. She shows several maps of the area. She says maps show that the Yellow Sub building has existed as a commercial building since at least the 1920s. Shows 1142 Indiana Street that is slated to be demolished. Shows the apartment complex next door that is slated to be demolished.
Zollner continues. Says the Historic Resources Commission is recommending that the project be denied. She says the HRC did not have a problem with the proposed use of a hotel on the site. But recommened denial because it did not meet the standards allowing property near historic properties to be torn down, and also the design of the project would not fit in with the historic neighborhoods.
Zollner continues. She explains that the city commission must find that there are no "feasible and prudent" alternatives to the project. She said the city commission can consider economic feasiblity factors and other issues in their decision. The HRC was not able to consider that factor. She explain that the city is asking for a certificate of appropriatness. HRC did not recommend a certificate of appropriatness be granted. City commissioners can overturn that decision. She says a public hearing must be held on these two issues.
Zollner continues. Says the city will have to make specific findings about why they do or do not believe there are feasible and prudent alternatives. Also will have to make specific findings about why maxium planning to minimize harm was or wasn't done.
Paul Werner, an architect for the developers of the The Oread Inn project makes a presentation. "What an unbelieavable project to be able to present tonight." Started doing research and found that we're the only Big 12 university that doesn't have a hotel on or near the campus. "It is a great concept." Says the development group made multiple presentations to the neighborhood. "We have tried to be as transparent as possible." On disagreements with the historic resources commission. Says four of the structures are historic. "We believe they aren't. They are just old," Werner said of the buildings that are proposed to be torn down.
Werner continues. Says the buildings to be torn down do not contribute to the historic districts. Says that HRC went by the strict guidelines that they have to go by, but those aren't the guidelines the City Commission has to follow. Why there are no feasible and prudent alternatives: He said the hotel needs to be this size to get all the programs it needs. Says that the hotel needs this many rooms to be feasible. Says can not just eliminate 2 floors of the hotel.
Werner continues. Said this is the public side of campus. "It is where a hotel belongs." Mentions student union. The chapel, the football stadium, the Alumni Center as uses that would benefit from a hotel. On design issues: Have about 200 underground parking spots. Structure is about 200 feet away from the Snow House, a historic property. Says Corbin Hall, a large residence hall, is closer to a historic district than that.
Werner continues. He said the building is designed to be stepped back so that its mass is made more acceptable. Says that improvements to the intersetion will make the area safer from a traffic stanpoint and for pedestrians. Says several new sidewalks and pedestrian paths will be created. Trash pickup and delivery entrance will be on the east side. Will be away from the Hancock historic district. Parking. "We knew from day one it would be a huge issue." We're at 200 spaces, he said. Using valet parking. "We think most of the people coming to this hotel will expect that." Says also have to have something to stop nonauthorized people from parking in the garage.
Nancy Longhurst. general manager of Eldridge Hotel and member of the development team. Notes that Eldridge Hotel is on the National Register of Historic Places. Takes history very seriously, she said. "We're building something that the community will be so proud of in 50 years when it can become a historic property." Talks about how tourism is economic development. Says this project will provide KU a "state of the art" hotel. She goes over the economic statistics of the national tourism industry. It generates about $100 billion in tax revenue on the national level. In Lawrence there was about $34.5 million in direct spending in 2006.
Longhurst continues. 184 conventions in Lawrence in 2006. 23,500 convention delegates in 2006 in Lawrence. "If you were to ask me whether I think that is enough, I would tell you that it is not." Says the city needs to do more to attract more conventions. She goes over some statewide tourism numbers. On the Oread project: "We will build a hotel that KU and the citizens of Lawrence can be proud of."
Longhurst continues: She said the hotel will help alums be more connected to the university. It will be a gathering spot for the university. The hotel will help expose people to Lawrence's quality of life. She says the target customer for Oread is to bring new corporate business that is happening currently outside the city of Lawrence. She said KU alums want to come back to Lawrence to hold their meetings. Wedding receptions would be a huge market for the Oread, she said. KU Continuing Education currently has some programs in Overland Park because of lack of facilities. The leisure travel market would be part of the market. Association meetings. "We are missing so many association meetings. They rotate around the state, and when they come to this part of the state, they are going to Overland Park."
Longhurst continues. Says that nationwide research shows that the travellers want upscale hotels. That is what the Oread project will be. On working with the Oread Neighborhood: She said the project always has been a seven story structure. Developer commits to renovation of Oread Apartments and a residence at 1209 Oread. Developer is committed to the realignment of 12th and Oread intersection.
Longhurst continues. Closes by saying as hotel operators they know this is what is needed to make the hotel work. "We know this is going to be a landmark property for Lawrence."
Dennis Brown, Lawrence Preservation Alliance. Said he didn't hear much in the presentation about why there wasn't a feasible and prudent alternative. "At seven stories and 95 feet it would be extremely tall. It would be downtown's tallest building if it were proposed for dowtnown, but it is not. It is proposed next to a residential neighborhood." Said one of the crieteria of HRC is to ensure the new project's design doesn't dominate the historic district. Understands that neighborhood association favors the project. He said he wishes the neighborhood would have given more thought to the historic issues. Says he has a letter from the former owner of the Snow House who is disappointed with the proposed project. Notes that the current owner of the Snow House favors the project.
Brown continues. Thinks a 5 story building would better. "It would still be a very large building, but it wouldn't dominate the neighborhood." He thinks a feasible alternative is to not use the top two floors of the project for condos. Eliminate those two floors. Build the condos in the apartment complex across the street that the developers own, or on another site in the area. "The applicant is seeking to build the design he wants regardless." "He is expecting you to find a way around historic guidelines that others have to follow. We think that could be the worst message you could send tonight." He said Lawrence presvation alliance believes this is a good site for a hotel.
Speaker name unknown. Thinks the building is too tall and would harm the surrounding historic district. Thinks the feasible and prudent alternative is to deny the project. She doesn't think this facility is needed to be for a gathering space for the university community. University doesn't have a problem gathering, she said.
KT Walsh, Lawrence resident. Thinks the size and scale of the project is too large. Says the city should expect more heritage tourists to town. Complents the Gene Fritzel Construction Co - developers of the project - for doing high-quality construction. But she said the company needs to hire a historic preservation expert to improve this project.
Jeff Morrow. worked and lived in neighborhood for 25 years. Worked in the Crossing in the late 1970s. Owned the Yellow Sub building at one time. Thought both buildings are "shot" and have outlived their usefull life.
David Holroyd. Lives about 500 feet from the property. Has lived there for 35 years. Has supported such an idea for this site for many years. Gives history about the Oread Apartments that are near the site. Glad to see them preserving this. Thinks the proposed design for the building is a bit boring, but believes the use is needed. "Lawrence is behind the 8-ball and somebody needs to start pushing it up hill fast."
Jody Meyer, member of the Historic Resources Commission. Says the HRC is encouraging redevelopment of the site. "No one on the HRC is saying that we have to preserve the Crossing, perhaps to the determinent of college students all over town." But she said the design of the project is unacceptable based on all the guidelines it must follow. Height of the building is a concern. "We wanted to work with the developers on the project, but it was made very clear that this was the project. There weren't going to be changes to made."
Meyer continues. She is concerned this project will create a bad precedent. "This building is taller than really any other building around. It is taller than the US Bank building. Taller than towers at Bella Serra. I really don't know what would be taller. Says the financial argument is commonly used as a reason why there is not a feasible and prudent alternative. Often times aren't given much detail about why it is not feasible. "When people are forced to find alternatives, they do it." "I think you are setting up other projects to go through the motions of the HRC process." Thinks this would give people the idea that they could "hop, skip and jump over the HRC process." Doesn't think enough evidence has been presented that there is a reasonable and prudent alternative. "Just because they say there isn't a feasible and prudent alternative doesn't mean there aren't." She also mentioned that she asked the developers to produce a 3-D model of the project and they did not do so.
Marci Francisco, lives in the neighborhood. Generally likes the project.
Sven Alstrom. Lawrence architect. "Simply put, a smaller building is what is needed here." Notes that the Eldridge Hotel is five floors. Doesn't think it has to be seven stories.
11:20 p.m. Sorry folks. Deadline pressures to get stories written for tommorow's newspaper require me to end the live blog now.
11:43 p.m. Due to the lateness of the hour, Mayor Hack said the city commission will defer The Oread Inn proposal until the Nov. 27 meeting.