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Archive for Monday, October 29, 2007

Developers explore financing options for Oread Inn

Taxing options would help pay for infrastructure

October 29, 2007

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Plans for a new seven-story hotel at the edge of the Kansas University campus have an added twist.

City officials revealed Monday morning that developers are seeking to use a special taxing authority to help build the approximately $30 million project.

At a study session of the City Commission, County Commission and the School Board, City Manager David Corliss said developers have asked that the city approve a tax increment financing district and a transportation development district for the project.

The transportation development district - which would be a first for the city - would create a special sales tax rate for the hotel project and the restaurant that is planned as part of it. The hotel would charge an additional 1 percent sales tax on top of the normal sales tax rate in the city. The revenue generated from the extra sales tax would be used to help pay for road improvements near the 12th and Indiana site.

The development group - which is led by executives of Gene Fritzel Construction Co. - also want to use tax increment financing. That concept involves the city, the county and the school district agreeing to give up future increases in tax revenue from the property for 10 or more years while street, parking and other infrastructure improvements are paid for.

A TIF essentially allows a development to earmark any property and sales tax revenues that are above the amount generated by the property today. The earmarked tax money then is used to pay for infrastructure projects specifically related to the project.

In this case, the proposal has an interesting wrinkle in that one of the improvements proposed to be paid for is the hotel's underground parking garage. The garage would not be a public parking garage, but state law allows TIFs to be used to finance private parking garages.

But the proposed TIF deal is different from the one other TIF that has been used in the city - to redevelop the 900 block of New Hampshire Street.

In the hotel proposal, developers have agreed to sign paperwork that would protect the city in case future tax revenues aren't sufficient enough to pay for the bonds, which would be backed by the city. The development group would submit a letter of credit from a bank ensuring that the development group or the bank would make up any shortfall.

The development group is not asking that the city use any city at-large funds to pay for the infrastructure improvements in the area.

The City Commission is scheduled to discuss the special taxing options at its Nov. 6 meeting. Ultimately, the School Board and the County Commission will have to approve the TIF concept. Both have veto power over the TIF idea.

Comments

OnlyTheOne 6 years, 11 months ago

LOL! But I fear it'll be approved

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Michael Sizemore 6 years, 11 months ago

let's see... 1. damaging to the historic environment. 2. non-compliant with lawrence zoning ordinances. 3. a tax-burden. 3 strikes and you're out? if the project does not fit, you must a...quit!

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Godot 6 years, 11 months ago

Unbelievable. It just keeps coming, in dribs and drabs, or more like, stone, after stone, after stone, dragging us down to the bottom.

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Godot 6 years, 11 months ago

It this the first time this was brought up, or is this another case where it has already been agreed upon, in closed door session, and the hapless citizens are just now being informed?

TIF, by the way, is meant to be used as an incentive to revitalize blighted areas, where, without the incentive, no one would be willing to invest. That clearly does not apply to this situation.

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just_another_bozo_on_this_bus 6 years, 11 months ago

This will be approved-- that was assured in the last election. Government of, by and for private developerment interests. And they'll raise everyone else's taxes while they're at it.

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jlw53 6 years, 11 months ago

Don't the Fritzels have enough money already with out stealing from the local taxpayers too?

No issue with them making good money through private development by taking the inherent risks involved, but I have NO interest in feathering their nest with public subsidies!

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KU_Dude 6 years, 11 months ago

Defender (Anonymous) says:

And my friends wonder why I hate Lawrence:..


And yet you still read the Lawrence paper and find the need to post uselss comments..................

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BigPrune 6 years, 11 months ago

Same price tag as their library.

If you throw enough paper wads at a ceiling, eventually one will stick.

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Marcus DeMond 6 years, 11 months ago

I am going to miss The Crossing on game days and sunny afternoons. Back in the day, it was a real treat after a tough test to go have a beer with my fellow students. Of all the historic buildings the city protects, this should have been one of them. Long live The Crossing!

Oh and KU_Dude, thanks for the laugh.

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Bruce Bertsch 6 years, 11 months ago

If it's such a good investment, let the developers risk their own money/credit lines. The tax payers of Lawrence should not be asked to guarantee financing on this in anyway shape or form. Ask KCMO, TIF financing almost never generates the income stream projected. It is not a good deal for Lawrence.

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toefungus 6 years, 11 months ago

So, I guess this hotel on a hill is giving a higher education to the citizens of Lawrence.

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Michael Capra 6 years, 11 months ago

back away from the bong this is a great thing we are adding for ku

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Godot 6 years, 11 months ago

Could be that the city has become the lender of choice because commercial lending has dried up.

I agree with Hawk, if this is such a good deal for KU, let the Endowment Association lend Fritzel the money. If it is too risky an investment for KU Endowment, then it is for the City of Lawrence, as well.

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Dwight_Schrute 6 years, 11 months ago

notnowdear - bye! Oh, and take those that you reference (or speak for) with you.

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deskboy04 6 years, 11 months ago

I am hoping that I can get a job at the new hotel. It will be great for the Lawrence economy!

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Godot 6 years, 11 months ago

Because the world credit market is on the verge of collapsing, the insurance companies that insure municipalities to improve their bond ratings are facing ruin. The chances that Lawrence could put together a bond deal before the stuff hits the fan are slim.

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oldgoof 6 years, 11 months ago

wow, Godot....the financial analyst.

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Meatwad 6 years, 11 months ago

You NEED to read this. Here is an example of a TIF, but it went very, very wrong. I seriously hope our city pays attention to this. http://www.pitch.com/2007-08-16/news/not-hiring/

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blackwalnut 6 years, 11 months ago

deskboy04 (Anonymous) says: But what about the jobs!

The jobs! The jobs! These crooks on the city commission ran on "the jobs" - and look what they have given you: cut services, trying to raise taxes in a new way every other week, and pushing giveaways for developers down our throats.

Developers bought the posts for this city commission, and developers are expecting payment now.

RECALL ELECTION!

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