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Archive for Thursday, May 20, 2010

Costly miscue

Junction City now is paying the price for going overboard on efforts to meet a population boom that hasn’t materialized.

May 20, 2010

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Thanks to lower property valuations, Lawrence and Douglas County will face some budget challenges this year, but the problems our local governments face pale in comparison to the situation in Junction City.

On Tuesday, the Junction City Commission approved putting a 1 percent local sales tax increase to the city’s voters on Aug. 3. That will be on top of the 1 percent increase just approved by the Kansas Legislature and probably will be a tough sell to Junction City voters. However, commissioners said the tax is necessary to pay off nearly $70 million in debt the city ran up when it built infrastructure to support new housing developments it believed would be needed to serve a large influx of soldiers at nearby Fort Riley.

Although Junction City’s population has grown, it hasn’t grown nearly has much as it expected, leaving the city with thousands of vacant housing lots and a huge debt. Even if the sales tax is approved, the city’s property tax levy will have to go up 8.6 percent next year. Without the sales tax, a property tax increase of nearly 87 percent would be needed to pay off the debt. That figure may make Junction City voters look more favorably at the proposed sales tax.

Looking back at the situation, city officials say they should have hired a city planner and financial adviser to help manage the expected growth. Estimates from the Pentagon and other sources, they say, prompted them to overcommit city resources. It probably didn’t help that the mayor at the time has since been convicted and sentenced to prison for accepting cash and gifts from developers.

In December 2006, the Wichita Business Journal reported that the Junction City and Manhattan area was expected to grow by 30,000 residents in the next five years. It said 6,000 homes or apartment units were under construction in Geary County, which had 50 active housing additions. In the previous two years, Junction City had annexed between 1,200 and 1,400 acres.

It was being called the state’s biggest economic boom ever, and people in Lawrence and other Kansas communities where the housing market was stagnant were a bit jealous. Developers and homebuilders from all over the state, including Lawrence, were rushing to extend their business reach into Geary County to get a piece of the action.

Unfortunately, the boom has not lived up to expectations, and Junction City officials and taxpayers have learned a hard financial lesson. The situation they now face certainly doesn’t inspire any jealousy from other Kansas communities.

Comments

Richard Heckler 4 years, 7 months ago

Boom town economics has cost Lawrence taxpayers plenty as well. Oddly enough some of the same names have been involved,

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http://cjonline.com/news/state/2009-06-08/feds_charge_jc_developer

Boom Town for Lawrence Developers http://www2.ljworld.com/news/2006/aug/20/fort_rileys_boom_boon_lawrence_developers/?print

Freeman also said Tuesday that he and Wunder helped another Lawrence company - http://www2.ljworld.com/news/2009/oct...

Lawrence Scuttlebutt http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=153x924

“Barnes was enthralled with this Freeman guy,” said Pete Robertson, a Junction City lawyer who worked with the Junction City Taxpayers Association, which raised a red flag about the city’s rising public debt and the activities of some of the developers."

http://cjonline.com/news/state/2009-06-08/feds_charge_jc_developer

“If residential growth paid for itself and was financially positive, we would not be in a budget crunch. But with increased numbers of houses you have increased demand on services, and historically the funding of revenues generated by residential does not pay for the services, they require from a municipality.

Richard Heckler 4 years, 7 months ago

Our bedroom community and overloading the retail market = high tax dollar "boom town economics"

Over loaded retail space promotes economic displacement NOT economic growth

meanwhile:

By Kim McClure

July 24, 2009

To the editor:

The July 14 editorial asks, “What’s downtown going to look like five, 10 or 15 years from now?” The answer can be known, and the picture is not pretty.

Lawrence has enough spending to support about 4.1 million square feet of retail space, but the City Commission permitted developers to expand the supply to over 5.5 million square feet.

Lawrence has too much retail space chasing too few vendors, which means that many stores go empty, especially in the older shopping centers like downtown.

The surplus development has stalled redevelopment plans downtown and has pushed the vacancy rates so high that disinvestment and blight now threaten. Investment, both public and private, is wasted. The taxpayers’ $8 million parking garage stands largely empty. The Hobbs-Taylor building and the 600 block of Massachusetts should be the top performing spaces in the community, but they have significant vacancies.

The recession has contributed to the problem, but had we properly managed our growth we would be much better off.

The developers’ short-term gain is now our long-term loss. Managed growth would have prevented much of the problem and would have protected and enhanced our downtown.

It will take many, many years to absorb this surplus space and, until this happens, it will be hard for downtown to compete. We can only look forward to many years of high vacancy and disinvestment. We need a City Commission that knows how to pace the growth of supply so as to protect our unique downtown.

McClure is from Lawrence

http://www2.ljworld.com/news/2009/jul/24/retail-space/?letters_to_editor

funkdog1 4 years, 7 months ago

Oh come on. You're comparing 6,000 empty residences with library improvements?

And speak for yourself when you say the library addition is neither "needed or wanted." If you'd take a minute to actually walk into the library, you'd see that it's a bustling place, any and all hours of the day. Hey! Here's a thought! You could walk in and read a book. That'd be a first.

grammaddy 4 years, 7 months ago

So all those places Freeman built are sanding empty? Too bad, so sad.

just_another_bozo_on_this_bus 4 years, 7 months ago

What? You mean to tell us that cancerous growth and developer welfare have a downside? Who'd have ever thunk it?

imastinker 4 years, 7 months ago

iamtired - that's actually nearly ten times the going rate, at least for residential construction. Most residential construction now is $100-$125/sq foot and that's nearly $1000 for the library addition.

Joshua Montgomery 4 years, 7 months ago

This is one of the funniest things I have read in a while, thanks thuja, I just spit coffee all over my BDUs.

flyin_squirrel 4 years, 7 months ago

The quickest way to get rich is become a developer. The quickest way to go broke is become a developer. For all the people who bag on these developers, your offices, your houses, your grocery store, your clothing stores, your restaurants, etc... were all built by developers. If 100 years ago people like you were around, we wouldn't have a downtown Lawrence.

gl0ck0wn3r 4 years, 7 months ago

Yeah, the taxes imposed on Lawrence citizens for the empty buses is brilliant by comparison. I'd be curious to compare the real growth rates in both areas. I'd guess the JC/Manhattan area is growing and the Lawrence area is shrinking based upon media reports.

puddleglum 4 years, 7 months ago

"It probably didn’t help that the mayor at the time has since been convicted and sentenced to prison for accepting cash and gifts from developers"

HOLY smokes! what if that were illegal in douglas county? we'd have no 'leaders'....

scott3460 4 years, 7 months ago

Lesson #3,092,091 on why to never listen to anything a developer, or their stooges in Kansas local politics, has to say.

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