Archive for Wednesday, January 6, 2010

City advances lab lease

A lab building located in Lawrence is getting closer to being purchased. It's the latest effort in attracting bioscience companies to the area.

January 6, 2010

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City commissioners moved the city one step closer to having a new publicly owned laboratory building that would be used to attract promising bioscience companies to the community.

Commissioners at their Tuesday evening meeting unanimously approved a lease that will allow the Lawrence-Douglas County Bioscience Authority to lease the former Oread Labs building in west Lawrence, once the city and the county finalize a purchase of the building later this month.

The lease will allow the local bioscience authority to market the building to bioscience companies seeking laboratory space in Lawrence.

Approval of the lease is one of the last items before the city and the county will be ready to finalize a $2.3 million deal to purchase the building near Bob Billings Parkway and Wakarusa Drive from a group of Lawrence and Topeka investors. City commissioners are expected to issue the bonds for the project at next week’s commission meeting, and will close on the real estate transaction Jan. 26.

The lease is designed so that the local bioscience authority will make lease payments equal to the amount of money the city and county must pay to retire the $2.9 million in bonds that will be needed to purchase and renovate the building. The city and county have agreed to cover any interest costs for the bonds that are above 4 percent. That amount isn’t currently known because the bonds have not been sold yet.

But if the local bioscience authority is not successful in finding enough tenants to cover the bond payments, the city and county ultimately will be responsible for making the bond payments. The bioscience authority has one company — Lawrence-based CritiTech — that has committed to lease space in the building.

Commissioners said most of the details of the lease appeared fine, but they did question a provision that would give the bioscience authority an option to purchase the building from the city and the county for $2.9 million plus any costs the city and county have incurred on the building or the bonds.

The option would allow the bioscience authority to purchase the building at the city and county’s cost, and then potentially sell the building for a profit — although the city and county are potentially subsidizing the bioscience authority’s lease of the building.

Commissioners, though, said they were comfortable with the provision given that the bioscience authority board is largely appointed by the city and the county.

“And if this building ends up being an asset of great value, then the community will have benefited from it greatly by the jobs it has attracted,” Mayor Rob Chestnut said.

Other terms of the lease include:

• The lease would run through Sept. 1, 2034.

• The city manager and county administrator will act as a management committee of the building. That committee will approve matters related to the lease, and will be responsible for approving any subleases the bioscience authority makes with tenants.

• The bioscience authority will provide two reports per year to the city and county detailing the revenues and expenses related to the building.

In other City Commission news, commissioners:

• Unanimously approved a rezoning and plat for a shopping center development at the northeast corner of Sixth Street and the South Lawrence Trafficway.

The rezoning will allow for up to two big box stores to locate at the corner. Developers — which include members of the Schwada and Fritzel families — don’t have deals with retailers yet, but have said they believe a home improvement store and discount department store may be the most likely types of tenants.

Commissioners approved the plan with a right-turn lane off Sixth Street, but said that turn lane will be built only if Kansas Department of Transportation leaders approve of it. Thus far, KDOT has expressed concerns about the proposed turn lane.

Comments

repaste 5 years, 4 months ago

"Unanimously approved a rezoning and plat for a shopping center development at the northeast corner of Sixth Street and the South Lawrence Trafficway." "The option would allow the bioscience authority to purchase the building at the city and county’s cost, and then potentially sell the building for a profit" "Yes sir Mr, Frizzal. Your profits are our top concern"

just_another_bozo_on_this_bus 5 years, 4 months ago

"Approval of the lease is one of the last items before the city and the county will be ready to finalize a $2.3 million deal to purchase the building near Bob Billings Parkway and Wakarusa Drive from a group of Lawrence and Topeka investors. "

And still we have absolutely no answer to how and when this building, appraised by the county at $1.4 million, miraculously got nearly $1 million in improvements (and why property taxes were never assessed or paid on these improvements.)

Come on, JW, why have you apparently never even asked this very obvious question?

KU_cynic 5 years, 4 months ago

This Oread Labs deal just gets worse and worse.

Now the city commission is willing to extend an option to another quasi-government agency to buy the building. In other words, the downside risk belongs to the taxpayers; the upside risk does not.

This stinks.

Chad Lawhorn 5 years, 4 months ago

Bozo: You are incorrect on the issue of what reporting has been done regarding the purchase price vs appraised price of the building.

On Nov. 7 we reported the following: The building currently is appraised by the Douglas County Appraiser’s office for $1.48 million. But Dever said that appraisal was based on the property serving as a rental property that currently was largely vacant. He said the proposed $2.3 million purchase price is a good one for the community because it is far less than what it would cost the city and county to construct a similar building. “The estimates I have are that it probably would cost $5 million to build that building today,” Dever said.

On Nov. 17 we reported the following related to the Public Incentives Review Committee's discussion of the project:

"Former City Commissioner Boog Highberger — a recent appointment to the committee — voted against the proposal because he wanted the committee to request that an independent appraisal be done on the laboratory building.

Highberger said that would be a requirement if the deal were being privately financed. Several members of the audience earlier had questioned the proposed purchase price of the building, which is $2.3 million plus another $600,000 in improvements.

But other committee members balked at the idea of an independent appraisal. Chestnut said he was comfortable with information that the $2.9 million proposal was much less than what it would cost to build a similar laboratory building.

The committee was presented with information that the $2.9 million proposal represented a purchase and renovation price of $166 per square foot. A bioscience incubator that currently is being constructed on KU’s West Campus is being built at a cost of $270 per square foot."

Bozo, you may not agree with the answers given by officials, but to say there has been no reporting done on the issue is incorrect.

Chad Lawhorn Journal-World

just_another_bozo_on_this_bus 5 years, 4 months ago

You're right, Chad, the answers from city officials, especially Dever, are quite inadequate. If Dever is correct, the property owners have a $5 million building that's been assessed at about 1/3 of its actual value.

That begs a couple of questions--

How many other buildings in the county have low appraisals because they are vacant or not fully occupied?

And with the glut of apartments going up in town, can anyone with a vacant rental property appeal to the county to have their assessment reduced?

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