Archive for Wednesday, August 17, 2011

Town Talk: Large Lawrence employer sold to General Dynamics defense firm; condo development to be sold by sheriff on Thursday; an odd ending for police and fire negotiations

August 17, 2011


News and notes from around town:

• Lawrence’s largest private employer soon will have a new set of bosses. General Dynamics — yes, the company that has made a living producing weapons systems for the U.S. government — has reached a deal to buy Vangent, which is a major employer out in the East Hills Business Park. Vangent is a large government contractor that provides computing and management services for a variety of federal programs — everything from the Census to student loan programs. It operates a call center at East Hills that traditionally employs more than 1,000 people. Don’t worry flower children, the Lawrence location will continue making calls — not tanks or missile systems. General Dynamics, like many defense contractors, is looking to diversify. Vangent will become part of General Dynamics Information Technology, which already is doing some of the same type of work that Vangent does. But the acquisition of Vangent will provide a major boost to General Dynamics. Vangent already has major IT-related contracts with the U.S. Departments of Health and Human Services, Education, Labor, State and Defense.

The best news for Lawrence in this deal is that a spokesman for General Dynamics told The Washington Post the company has no plans to change Vangent’s locations or staffing levels.

Vangent’s Lawrence employees are used to corporate ownership changes. The company started in Lawrence as NCS, which I believe stood for National Computer Systems. (I’m sure there is an NCS trivia champion out there who can correct me.) Then the international publishing company Pearson bought the firm in 2000 and it was known as NCS Pearson. Then in 2003 the company changed names to Pearson Government Solutions as part of a corporate reorganization. In 2007, change came again when the New York-based private equity firm Veritas Capital purchased Pearson Government Solutions, and changed the name of the company to Vangent. (This company and its name changes have been like a federal stimulus program for business card and stationery printers.) The press release announcing the deal didn’t make it clear whether the Vangent name would continue or whether the Lawrence location will now be known as General Dynamics Information Technology. (I expect to see printers circling the parking lot nonetheless.)

The $960 million deal already has won approval from both General Dynamics and Veritas’ boards. The deal is expected to close by Oct. 1.

• Speaking of deals, although presumably less than $960 million, the manager of The Dusty Bookshelf confirmed to me that the company is very interested in starting up a new business venture in the former Penny Annie’s location near Ninth and Massachusetts streets. But the company hasn’t yet signed a lease for the spot, and is stopping short of confirming any plans for what it wants to do with the location. The owners of The Dusty Bookshelf also own the ACME T-shirt store that is adjacent to the Penny Annie’s location. So that spot holds some appeal to them. But manager Shannon Jones told me that plans don’t call for The Dusty Bookshelf to leave its current location for the Ninth and Mass. spot. Instead, it could be more of an “annex” for The Dusty Bookshelf. I previously reported that the location could include vintage bicycles and doughnuts. Whether that pans out, I don’t know. The owners of The Dusty Bookshelf and ACME started their businesses in Manhattan, and they currently are starting a business venture out there that includes those elements. It is too soon to say whether that concept makes its way to Lawrence, Jones said.

“Right now we’re still really in the idea phase,” Jones said.

My elastic waistband awaits your decision.

• Residents of the condominium complex Bella Sera at the Preserve, near Bob Billings Parkway and Wakarusa Drive, also are awaiting what’s coming next. No, not the doughnuts. (Though, maybe. A dozen glazed by the pool has a nice sound to it. No need for napkins.) What they’re really interested in is whether the struggling condo development is going to get new life. There will be a sheriff’s sale at 10 a.m. Thursday in the jury assembly room of the Judicial and Law Enforcement Center at 11th and Massachusetts. The sale is the latest step in an area bank — M&I; Marshall & Ilseley Bank — foreclosing on the property. According to court documents, the Bella Sera development group took out a $16.28 million loan in 2006. The developers have since fallen behind on the payments, and $13.45 million still remains unpaid.

The sale includes 38 condo units and a vacant piece of property adjacent to the development. My understanding is that the condo units are basically blank shells awaiting the final interior finishes. I’ve had people ask me whether the auction will be the type where people can buy individual condo units. I wish I had a better answer, but I don’t think so. I have been unable to get in touch with the Kansas City attorney who is handling the foreclosure, and the sheriff’s office didn’t know either. I think all the units and land will be sold as one package. Regardless, bidders at a sheriff’s sale need to come armed with cash, or at least a cashier’s check. Once you make a winning bid, you have to produce the money later in the day.

Chances are, the bank will end up the owner of the property after the auction. Residents out at Bella Sera hope that the new ownership will spur more activity at the site. Tammy Steeples — who lives at the development with her husband, Don — told me that only about 13 of the 50 units in the building are occupied.

“The neighbors who are here are anxious to get more neighbors,” Steeples said.

She said the development is extremely nice. It includes a swimming pool, a huge patio, an outdoor kitchen, a media room for up to 20 people, a bar area, and a lobby that “looks like a four-star hotel.”

But she said the development group — which was lead by Lawrence businessman Jes Santaularia — got the project started at the wrong time. The real estate bubble burst, and home and condo sales dried up. (That is the Santaularia that unsuccessfully tried to partner with the city on a new industrial park near the Lawrence Municipal Airport.)

The residents pay homeowners association dues, and Steeples said so far there hasn’t been a problem with keeping the common property of the condos maintained during all this legal limbo.

“But we’re hoping that this will really allow them to start selling again,” Steeples said. “Maybe there will be some bargains out here for awhile.”

• City commissioners Tuesday night finalized employment contracts with the city’s police and fire unions. It was kind of an evening of odd moods at City Hall. The spokesman for the Lawrence Police Officers Association gave brief remarks that mainly centered on how the new deal was a strong commitment by the city to attract and retain quality officers. He thanked commissioners for a 2012 budget that adds new police officers.

The leader of the local fire union, though, gave remarks that urged city management to really think about changing how it negotiates with the unions. Kathy Elkins told commissioners that the five-month negotiations took longer than they should have. She also indicated that the negotiations have become less friendly than they need to be. Elkins urged commissioners to “get back to inter-space bargaining,” which I gather from my friend Google is a term for a type of bargaining session that is less adversarial in nature, or else has something to do with Star Trek. (MBA students, impress your professors. Get on the comment board and explain interspace bargaining. Somebody wake me when they’re done.) UPDATE: I've been told the term is interest-based bargaining, although there are several scholarly articles about inter-space bargaining on the Web as well. So, I'm confused. The only thing I know is that if it is not inter-space bargaining, Dr. Spock is going to leave the negotiating table.

But the most interesting comment Elkins made was that if the negotiation process doesn’t improve “it is going to end up being trouble again, like it was a number of years ago.”

I don’t know what that means, and Elkins was in no mood to talk after the meeting. She declined to take questions from me.

One point of clarification, though. I previously have mentioned that the city’s unions really aren’t unions. That’s only half true. The police officers group is an association. The fire organization, however, is an union, Elkins pointed out during the meeting. My understanding, though, is it still can not strike. I apologize for the confusion.


lunacydetector 6 years, 8 months ago

best line ever...."Don't worry flower children..."
no peace maker nuclear warheads or warbirds of death.....

sad_lawrencian 6 years, 8 months ago

The story about Vangent is worded confusingly. Vangent is the company with the call center in Lawrence, but Vangent is owned by a venture-capital firm known as Veritas Capital. This writeup confuses the two names, without explaining who Veritas is.

Chad Lawhorn 6 years, 8 months ago

Now that we have that settled . . . I mention Veritas in a paragraph earlier than I meant to. I've changed that. I do mention who Veritas is: "In 2007, change came again when the New York-based private equity firm Veritas Capital purchased Pearson Government Solutions, and changed the name of the company to Vangent." Thanks for keeping me honest fellows. Chad

jackpot 6 years, 8 months ago

Chad Just keep the info coming, learn more from T.T. than most of the rest of L.J.

blindrabbit 6 years, 8 months ago

Alice to too old and settled to think about moving her; best wishes to The Dusty Bookshelf.

Plurilingual 6 years, 8 months ago

The price on those condos is going to have to come WAY down if they expect to sell any of them. There are just way too many houses on the market at very cheap prices. There are even neighborhoods where the landscaping is taken care of for you.

If they could get it down around 250K, then they could fill them up pretty quickly.

Ron Holzwarth 6 years, 8 months ago

This article contains a blast from the past for me. In 1979 and 1980, I was an employee of a subsidiary of General Dynamics, and I worked for a division known as DatagraphiX, in el Cajon, California.

I was a technician for what seemed to me to be the most useless machine in the world. It was very much like a Xerox machine, except instead of making copies of paper documents, you put a piece of microfilm into the machine and it would produce more microfilms that were exact copies of it. An explanation of exactly how it worked would be rather lengthy, because it was rather complicated.

After I had worked there for a while I was told that most of the customers for the machine were banks who needed to share their records among different branches, and that the machines weren't actually sold, but rather were only available on a lease basis.

Then, a few weeks into my employment there, I was told something that really surprised me and that was that the service interval interval for service visits by a for readjustment was only one week. And, when the machine was first delivered to a customer, a field technician would unpack the machine, and readjust everything that we had spent so much time getting exactly right at the factory. So after that, I didn't put forth so much effort to get all of the adjustments exactly dead center of the adjustment range. Anywhere within that range was good enough.

It wasn't a bad job, really. I worked with some very fine people there, and we all had one thing in common, and that was that none of us took our jobs very seriously.

There was a lot of overtime, because we were always behind on orders. I especially liked getting paid triple time for working on Sundays, but I didn't really enjoy it going in that day very much. But, since we were hardly supervised on Sundays, we did very little work on that day anyway. The amazing thing was that no one ever seemed to notice that.

Of more interest to me was the machine in another department that I worked on occasionally. You put reels of magnetic tape which contained data on exterior of that machine, and a few minutes later, it produced microfilms from the data contained on them. This was before floppy disks were in common use.

That one was a fantastically complicated machine, because not only did it contain all of the imaging equipment to produce characters and numbers from the data, it also contained a complete darkroom within it that produced microfilms using the standard metal halide process that is used to produce black and white photographs.

That machine was more or less a cube, and it measured perhaps ten to twelve feet on an edge. I have no idea how it was shipped to the customers, but it must have been very expensive to get it to them. But, compared to the lease payments on the machine, that wasn't very much at all.

General Dynamics is certainly a very well diversified company!

Ron Holzwarth 6 years, 8 months ago

When I reread that posting, I noticed that there are two grammatical errors in it. I am sorry about that, and I would like to correct them. But it's to late now.

Crazy_Larry 6 years, 8 months ago

If you can't use the English language correctly, very few educated people will take you seriously.

Steve Jacob 6 years, 8 months ago

Bella Sera looks beautiful, but yea the price I am sure is to high. Plus don't forget the new, I am sure cheaper, places almost finish on 6th and Folks.

Chad Lawhorn 6 years, 8 months ago

Detective Mike McAtee. He is the president of the Lawrence Police Officers Association.
Thanks, Chad

monkeywrench1969 6 years, 8 months ago

That didn't take long. definition of "Alleged"

Definition of ALLEGED 1: asserted to be true or to exist 2: questionably true or of a specified kind : supposed, so-called
3: accused but not proven or convicted

So by definiton it has not been proven or maybe you me it is doubtful he was involved with LPD corruption against the YH. HAve you turned the other cheek and decided to side with McAtee.

Where is the distain for the Firefighters who are complaining instead of being thank ful for getting something in these hard times.

ThePilgrim 6 years, 8 months ago

"Don’t worry flower children..."

LOL. +1.

Doesn't really matter if they make weapons or not. Their employees will be Gen Dynamics employees, with all the glory. Good benefits, and scowling looks when they tell their flower children neighbors that they work for GD. Almost equivalent to being bought by Koch. Imagine the look you get when you announce that you work at Koch.

imagold 6 years, 8 months ago

"Speaking of deals, although presumably less than $960 million, the manager of The Dusty Bookshelf confirmed to me that the company is very interested in starting up a new business venture in the former Penny Annie’s location near Ninth and Massachusetts streets."

...former Penny Annies??? Say it ain't so!

ljwhirled 6 years, 8 months ago

Where have you been? Penny Annies is going, going, gone.

Flap Doodle 6 years, 8 months ago

I was working for NCS when they moved out of the Golf Course Superintendents' building and into East Hills. There were hords of field mice in the new office. Squeak, squeak.

schula 6 years, 8 months ago

Snap -- I worked at NCS from November 1998 - October 2006. I bet we know some of the same people!

notanota 6 years, 8 months ago

I just wanted to let you know that if you answer yes to any of the questions on section D, you are a dependent and must list your parents' income.

Bob Forer 6 years, 8 months ago

A 16.28 million dollar mortgage for a mere fifty units. That translates to 325,000 per unit and doesn't even include investor capital or developer profit. I'd like to know the name of the banker who approved this loan. Maybe he'll loan me a few million.

Plurilingual 6 years, 8 months ago

If I remember correctly, the sign out front stays that the condos "start" in the 350s. I could be slightly off though.

ljwhirled 6 years, 8 months ago

He would have been happy to.

Then he would have sold the loan to Goldman Sachs.

Goldman would have bundled it with a bunch of other loans, and taken it to Fanny or Freddie to get it backed by the Federal Government.

The loan would then have been rated by S&P, Moody's or Fitch (AAA I am sure)

It would then get sold to retirement funds, KPERS, etc. etc. as a mortgage backed security.

When it went into default, it would have been sold to the Federal Reserve as a "distressed asset"

Odds are, you the taxpayer are the one who ended up with this loan.

Congrats! You own a toxic asset!

Richard Heckler 6 years, 8 months ago

Bella Seras is a project that should have been denied. No market for high dollar senior living quarters. Instead it is a drag on the economy and taxpayers.

So why more at 6th and Folks Rd?

Why more empty bedrooms for any segment of the population anywhere in Lawrence,Kansas? City commissioners and developers move ahead on projects without knowing if the community can absorb the supply. AKA not knowing if there is a demand for such activity.

The most successful real estate endeavor in Lawrence,Kansas is Instead of expanding our tax base we are expanding our tax bills! The one consequence that usually goes unmentioned - helter skelter development and over building our flooded markets is draining our pocketbooks and raising our taxes.

Face it folks high dollar bedroom community Lawrence,Kansas has the self imposed image of high taxes and unaffordable living. ALSO I am not sure there is enough activity for upwardly mobile senior citizen baby boomers in Lawrence,Kansas aka more hype than substance.

New growth brings new and more crime activity which is no secret.

City Hall needs to stop allowing the developer driven Chamber of Commerce from calling the shots. Lawrence,Kansas taxpayers cannot afford Chamber led government.

Kookamooka 6 years, 8 months ago

Everyone is banking on Lawrence "bouncing back" but there is no evidence to support this. Unless the out of state developers are talking to the Koch people who have Brownback by the nose. It's possible there are "underlords" with some masterplan to take over our Liberal island and crappy apartments are part of the deal. Its enough to make me want to move out of this stupid state but I think I'll grab my pitchfork instead. It's going to be the French revolution all over again, baby.

Crazy_Larry 6 years, 8 months ago

"The leader of the local fire union, though, gave remarks that urged city management to really think about changing how it negotiates with the unions."

I suggest the City of Lawrence take the Gov. Scott Walker route to union negotiations.

Kookamooka 6 years, 8 months ago

Why would the city trust a man to develop anything again after bankrupting and dumping his last luxury development? NO. Go with proven winners. I all developers have broken down ghost properties in their closets?

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