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Archive for Wednesday, November 11, 2009

City moves forward on laboratory building

City and county commissioners helped progress a proposal Tuesday that could help keep a company in the city.

November 11, 2009

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A $2.9 million proposal for the city and county to purchase a west Lawrence laboratory building to boost the community’s standing in the bioscience community won a key vote of confidence Tuesday.

Lawrence city commissioners unanimously voiced support for a proposal that would have the city and county team up to purchase the former Oread Labs building near Bob Billings Parkway and Wakarusa Drive. The nearly 18,000-square-foot building would be leased out to bioscience companies — including CritiTech, a Lawrence-based pharmaceutical company looking for room to grow.

“We can either take a passive approach to economic development or we can take a proactive approach,” said Commissioner Lance Johnson. “This is what you do to get jobs. You get down and dirty. You can’t just send out glossy brochures and hope people will come.”

Commissioners did not give final approval to the project Tuesday. Instead, they directed the city’s Public Incentives Review Committee to review the proposal and make a recommendation. The committee will meet at 4 p.m. Monday at City Hall to discuss the project. County commissioners will discuss the project at their meeting tonight.

City commissioners were told there is some risk with the project, particularly if the building does not attract as many tenants as projected. Members of the public weighed in on both sides of the issue.

Supporters told commissioners the building was a key part of a long-term strategy to grow above-average jobs in the community.

Opponents argued that taxpayers were being asked to shoulder too much risk because the bonds for the project ultimately would be paid off by city and county taxpayers if the project didn’t attract enough tenants.

City commissioners are expected to discuss the proposal again in early December.

Comments

BigPrune 5 years, 1 month ago

I wish I would've watched the City Commission meeting last night, but I decided KU was more exciting.

Why isn't this property sold to a private investor with the lease in place, because the seller won't get as much money with the vacant space?

The initial appearance of non-transparency is a perfect example of what gets the leftists all stirred up in reference to the 'good ol' boy' network running this town. Next time, transparency please!

However, I'd still like to know the answer to my question, especially when there has been office space sitting empty for almost 10 years throughout this town. Surely someone could've built a less expensive building - oh that's right, the guy that owns the building also owns the business, so he gets top dollar from the taxpayers and makes a tidy $1.4 Million dollar profit in 7 years plus gets his former building repaired. Sweetness.

Maybe there just needs to be an article that explains, step by step, just what Lawrence and Douglas County is gaining by buying this building.

I am all for jobs, don't get me wrong. It just seems like such a large expense for so few.

Zachary Stoltenberg 5 years, 1 month ago

I do believe that the main reason the building is half empty is that the building owners raised the rent to the tune of a million dollars a year and lost one of their two tenants. Criti Tech probably told them to take a hike too. What would I do with a building that needs updates and repairs, that has already lost one tenant and the other is only staying because he owns part of the buding... OH YEAH! Get the city to buy me out! I think we need to call this what it is, a bail out. If the building is such a great investment opportunity, some private investor will buy it.

cowboy 5 years, 1 month ago

referred to the public incentives review committee....made up of Amyx , Chestnut , Morgan , a county commish and a CPA , a superstious dance to appear like there is actually a review of this boon doggle.

I stated last week that if this "secret" eco devo opportunity turned out to be something good I would gladly eat crow on it. Well I'm not eating any poultry in the near future.

Too much money and a very dubious or negative return.

just_another_bozo_on_this_bus 5 years, 1 month ago

If the valuation of this building went from $1.4 million to $2.3 million, when did that happen? Why were they allowed a free pass on any property taxes that should have been due?

Come on commissioners, something stinks about this deal, and the taxpayers deserve some answers. Or is this just Deciphera Pt. II?

50YearResident 5 years, 1 month ago

Why is the City buying property with the taxpayers money and going into the rental business? A contaminated chemical plant, an old train station needing 1/2 million in repairs and now a half vacant building needing another 1/2 million in renovations, what is the next project to be added to the taxpayer's back?

in123 5 years, 1 month ago

Yes, this is starting to look like a Deciphera Pt. II.

There are so many conflicted people involved in these deals you need a scorecard to keep up. The one thing that you do know is that it is going to cost the taxpayer something.

This deal was in the works in December 2007. See http://www2.ljworld.com/news/2007/dec.... From that article: "The authority (LDCBA) is looking at several potential configurations and locations, Epp said.

Among them is the former Oread Inc. Bulk Actives Pilot Plant, a former production center for small batches of drugs that has since been transformed into high-tech lab space now occupied by two growing life-sciences companies: Deciphera Pharmaceuticals and CritiTech. " Then the article goes on:

"Once Deciphera relocates - expected to be sometime in 2008 - CritiTech would expand its operations but still leave about 15,000 square feet of the building's nearly 20,000 square feet of space available for use as a potential incubator at 4950 Research Park Way.

Sam Campbell, CritiTech's chief executive officer and general partner for the group that owns the West Lawrence Laboratories building, said that opening up space for another Deciphera-type operation simply made sense.

"The whole idea is to have companies do exactly that - to grow out of space and into their own location," said Campbell, who remains confident that CritiTech's work on improving specific cancer-fighting drug formulations could lead CritiTech to outgrow its space in the coming years.

"There will be a good opportunity to get that space completely full and producing the kinds of companies we want," he said."

Well that didn't happen! There has been no additional tenants and the incubator partially funded by the city and county at $75K per year for each went to the west KU campus. See http://www2.ljworld.com/news/2009/sep...

No additional tenants for The New Oread Group and now competition for the same tenants. What's a landlord to do -- get a bail-out from the city and county.

remember_username 5 years, 1 month ago

Maybe it could have been a better homeless shelter than the old Don's Steakhouse - sorry, couldn't stop myself.

in123 5 years, 1 month ago

The scorecard (incomplete)

Sam Campbell - General Partner of The New Oread Group (landlord), Chairman and investor in CritiTech, investor in Deciphera, and I am sure the list goes on. (Don't forget the controversial Ad Astra Funds.)

Matthew McClorey - President & CEO Lawrence Regional Technology Center; CFO CritiTech; CFO Osteogenex; President Lawrence Douglas County Bioscience Authority; CEO Cadstone. How many jobs can one person hold?

I don't think full disclosure has yet been learned by our leaders even after the Deciphera deal. This is deja vu!

I'm sure that there are more.

When they talk about job creation, it always seem to create another job for Mr. McClorey.

Richard Heckler 5 years, 1 month ago

Reckless spending of OUR tax dollars.

Remember when at least 4 of the city commissioners said they would good stewards of our tax dollars?

This is insane.

Notice none would spend THEIR OWN money so loosely.

It seems our commissioners should take out a private business loan and buy the building then get down and dirty.

Lawrence has become a money hole.

Don Zimmer 5 years, 1 month ago

  1. I expected the new commissioners would be better stewards of our taxes, especially in today’s economic environment. Some opportunities, which this does not appear to be one, you just have to pass on until the economy improves.
  2. In this case there are too many conflicts of interest in the parties. At least do what any practical person does and negotiate the price to reflect current values and alternatives. Commercial values are down 30% or more, ask any buyer, banker, or appraiser. Basing values on future expectations is what got us into this mess in the first place. The owners group are in the real estate business and if they cannot find tenants what makes the City/County think they can.
  3. The threat that they will move the business to another community appears shallow. If they move the business then the property owners (who are also the tenants) will no longer have any tenants for their building and then what is the empty building worth.
  4. A tenant expects the unit to be habitable. The air conditioning works and the improvements to meet tenants needs are priced into the value of the building. In other words if it is worth $1,000,000 based on current rents (which meets the tenant's needs) and needs $500,000 in deferred maintenance to meet tenant's needs it is not worth $1,500,000 just the $1,000,000. To overpay for a building from an owner (who is also the tenant) bring it up to date and then lease it back to them at below market rent should set off alarms. if you buy a house with a roof that needs to be replaced you do not pay as if the roof is new and then pay additional money to have it replaced.

chocolateplease 5 years, 1 month ago

This just doesn't sound right. If good opportunities exist with this building, then the owner should have little trouble securing investors who are more than happy to invest. I'd be very, very careful with this one.

Godot 5 years, 1 month ago

What bank and or banks are being bailed out by the taxpayers in this deal?

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