Advertisement

Archive for Tuesday, December 6, 2011

Too big a risk

December 6, 2011

Advertisement

To the editor:

The hotel proposed at 900 N.H. has become controversial. At a recent meeting, the developers indicated that they plan to request tax-increment financing (TIF) for the project. With TIF funding, the city provides funding for development projects, in effect “betting” that tax revenues will increase sufficiently that the city can recover its investment later.

Consider an example. Washburn-Lane Parkway Renovation LLC was granted $5 million in TIF funding in 2006 to create apartments, town homes and retail space in the College Hill district of Topeka. However, only slight increases in tax revenues resulted, so Topeka is not recovering its money. The town homes are empty, the apartments 60-70 percent occupied and retail space mostly empty. The developers are not even paying their property taxes: $130,196.77 unpaid at last report (Topeka Capital-Journal, Oct. 28, 2010). Lawrence’s own Douglas Compton is among the developers.

The proposed Lawrence development includes a hotel, apartments, restaurant and retail space. Compton and colleagues are confident that it will increase tax revenues enough to merit TIF financing. And if not, as in Topeka? The city would eat the losses. Translation: If Compton’s development fails, the people of Lawrence pay for it. No TIF financing has as yet been requested, but the developers indicated that they would. Compton indicated that he was investing $6.5 million of the $18 million needed; clearly, the developers plan to draw much of the rest from TIF. As per Lawrence city resolution 6789, the developers will argue that this project is viable only with TIF funding. The final straw … Lawrence residents will end up paying for it.

Comments

wtchdr46 2 years, 4 months ago

Are the Eldridge, and the place at Riverfront Mall both full occupancy every night, week, month?

0

Carol Bowen 2 years, 4 months ago

  1. The construction jobs would be beneficial, but short lived.
  2. We have an abundance of low-paying jobs. We need jobs that pat at least $20//hr. We also need mid-range jobs that pay $35 to $75k.

I agree with supersonic. Lawrence cannot sustain the development we have become accustomed to.

0

supersonicf111 2 years, 4 months ago

My comment above is not meant to be a dig on Lawrence.

I like Lawrence, but you need to be realistic about what you have as a town.

Find your niche as they say in the business world.

0

supersonicf111 2 years, 4 months ago

The problem is, that too many people in Lawrence unrealistically think that Lawrence can compete, or be like some larger city (Insert the name of your choice here).

The major reasons this will never happen are many. I listed just a few below.

1) You are sandwiched between a major metropolitan area, and a significantly larger town. 2) You have virtually no major manufacturing or industry. 3) No major airport nearby. The one North of town is not long enough, or wide to enough to safely handle any aircraft larger than a business jet during the hot and humid summers in Kansas. 4) Even a large portion of the visiting college sports teams that play in Lawrence, don’t stay in Lawrence. Most stay at the Sheraton on College Boulevard & I-435 in Overland Park. Most of their fans know this as well, and will book a room at the teams hotel anyway.

Why not be happy being a midsized university town, and build upon the quaintness of that, instead of wasting money chasing pipe dreams??? Spend money improving infrastructure and such.

Believe me, if you have something special, or make it something special, then people will be banging down your door to join in. Not banging on it to ask for help with their pipedream project so that they can make themselves richer. I have no issue with people making money or any amount of it, just use your own money to do it!

Don’t worry this is a all too uncommon disease for a city to have. I grew up in Ottawa, and they have the same problem there. That is wasting money chasing pipe dreams about main street or this or that.

If a company needs public financing to build something, then the public ought to get a significant stake in the company/property in return. That’s how it works in the venture capitol world!

0

Kirk Larson 2 years, 4 months ago

Another Riverfront Mall anyone? Tanger Outlet Mall?

0

Richard Heckler 2 years, 4 months ago

If not paying taxes is a matter of preferential treatment granted to the real estate industry how many local developers are not paying their taxes in Lawrence,Kansas?

Taxpayer deserve to know.

And where does one apply for this "Preferential Treatment" ?

0

Richard Heckler 2 years, 4 months ago

College Hill Taxes Unpaid http://cjonline.com/news/2010-10-28/college_hill_taxes_go_unpaid

One of the principals who is developing the corner at 9th & New Hampshire in Lawrence was quoted in the Journal World a few weeks back as asking for 'help' from the city with regards to financing the project. That same person was noted in a Capitol Journal article a month ago as being behind on and in default on a loan and property taxes associated with a development project in Topeka.
Quotes from the article:

Developers for a project to revitalize central Topeka's College Hill business district are in breach of their contract with the city because they failed to pay Shawnee County $130,196.77 plus interest for property taxes due May 10.

"First, the developer is currently in default under its loan obligations in excess of $16 million to the private bank group led by CoreFirst," he wrote. "In the event default of the loans is not remedied, the private bank group may move to foreclose on the property or appoint a receiver."

Topeka's city council voted in 2006 to provide about $5 million in tax-increment financing for a $30 million project in which Washburn-Lane Parkway Renovation built 183 apartments and 24,000 square feet of retail space on property it had acquired in the College Hill district, just northeast of Washburn University.

Developers Bill Newsome, Doug Compton and Steve Roth, of Lawrence, and Henry McClure, of Topeka, agreed to pay off TIF bonds issued by the city over a period of up to 20 years using the increase in property tax and sales tax revenues the city collected after the project was constructed versus the tax those same properties generated before the development was built.


Link to the article: http://cjonline.com/news/2010-10-28/college_hill_taxes_go_unpaid

0

Richard Heckler 2 years, 4 months ago

Build a project that the city could depend on for new economic growth.

Lawrence is a college town which the primary focus is education. That is where the money is so why not focus on more institutions of education? Build a business college,an art institute,a Vo Tech campus and a ASE automotive certification institute.

25,000-30,000 college kids bring lots of economic growth and tax dollars to town. Let's bring 45,000 students to Lawrence and watch economic growth take place.

Build a two maybe 3 story art and design education building. Transfer management to the quite capable Art Center director and let's bring more students to Lawrence,Kansas. Watch that corner pay back the community.

0

Richard Heckler 2 years, 4 months ago

So so many new hotels in quite recent times. Where is the market which is required? Nowhere to be found.

Violates downtown guidelines as well. A definite intrusion into someone's back yard which none of us would want.

A repeat performance is on the table for the River Levy/Johnny's.

Interesting facts regarding YOUR tax dollars AND MINE being spent recklessly on local for profit construction projects aka local development:

How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill)." Johnston reveals how government subsidies and new regulations have quietly funneled money from the poor and the middle class to the rich and politically connected.

Well, what is tax increment financing? I’ll tell you what it is. You go to the store with your goods, you pay for it at Wal-Mart, and there’s a very good chance that that store has made a deal with the government that the sales taxes you are required to pay, that government requires you to pay, never go to the government.

Instead, those sales taxes are kept by Wal-Mart and used to pay the cost of the store. And typically in those deals, the store is tax exempt, just like a church.

Now, there are two ways that it’s important to think about this. One is, that means your kid’s schools, your police department, your library, your parks are not getting that money. And you’ll notice we keep saying we’re starved for money. We’re twice as wealthy as we were in 1980, but we’ve got to close hospitals, and we’ve got to close schools, and we don’t have money for all sorts of things like after-school programs, even though we’re twice as wealthy.

The second thing to think about is, imagine that you own Amy Goodman’s or Juan’s department store across the street. You suddenly have to compete with people whom the government is giving a huge leg up on. You think you would go broke after a while? Well, in fact, you will.

http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

http://www.uua.org/events/generalassembly/2008/commonthreads/115777.shtml

0

Richard Heckler 2 years, 4 months ago

A downtown development group has dropped one project and is gearing up for a public fight over another with a local free-market group that opposes public subsidies for private development.

The disputes between Tulsa developer Paul Coury’s group and Americans for Prosperity center on the use of transient guest tax revenues – a tax paid by hotel guests to stay in Wichita hotels, not a tax levied on all taxpayers – to redevelop old buildings into hotels.

One Coury project could be headed for a public vote, if AFP generates 2,528 verifiable signatures to place on the ballot the use of guest tax revenues for the Ambassador Hotel Wichita, a 117-room boutique hotel proposed for the old Union National Bank building at Douglas and Broadway. AFP, which opposes government involvement in private development projects, wants voters to decide

Read more: http://www.kansas.com/2011/12/02/2126034/developer-drops-one-hotel-project.html#ixzz1flQONiSy

0

overplayedhistory 2 years, 4 months ago

The only thing as certain as death and taxes is the usual suspects lining their pockets, with the only risk falling on the greater public.

I don't hate capitalism! I hate what Greed backed by morons and/or politicians have done to the ability of the rest of us to participate in it.

0

just_another_bozo_on_this_bus 2 years, 4 months ago

We already have excess hotel capacity in downtown Lawrence. This will NOT be a hotel. It will be apartments and condominiums. And as for the restaurant, does anyone believe that there is a shortage of eateries, even of the fine-dining type, in downtown Lawrence?

If Compton wants to create jobs by building on that lot, let him build something of appropriate scale, and do it on his own dime. No one complained too loud about the behemoth he built across the street, so I guess he just assumed that meant he could do anything he wants on these lots.

0

Eybea Opiner 2 years, 4 months ago

The only thing as certain as death and taxes is the usual suspects lining up to protest any kind of development in Lawrence.

0

jafs 2 years, 4 months ago

thirdplanet's presentation of tif's is incorrect, according to a quick internet search.

They are, in fact, the use of potential future tax revenue to finance debt for private projects. And, while the projects sometimes generate the expected tax revenue, they don't always do so.

0

thirdplanet 2 years, 4 months ago

First off the comparison to the Topeka example is poor and misleading because the real estate markets bottoming out in 2007 is the direct cause of Topeka losing money on its investment. The investment failed, as so many others did in those years.

The claims made at the end of the Pete's letter is astounding, and the important thing is to not allow the city council to make up the funding gap with tax payer dollars. TIF can be safely and effectively used if used correctly, but we must not let Compton get away with a bargain deal. But remember with TIF, the only money Compton gets is a portion of revenue increases directly caused by the new building.

But the appropriate thing to keep in mind is the jobs such a project would create and what a hotel on mass street would do to the businesses downtown as a whole. If you want the unique restaurants and shops to thrive, if you want vacant buildings to fill up, hotels bring customers and money downtown to these businesses.

0

Commenting has been disabled for this item.