Work is under way on a seven-story apartment, office and retail building at the southwest corner of Ninth and New Hampshire streets. The city’s Public Incentives Review Committee on Thursday recommended giving a development group led by Lawrence businessman Doug Compton about 80,000 in incentives related to the project.

A key city board rejected proposed financial incentives for a South Lawrence project that would feature an Olive Garden, leaving the restaurant’s Lawrence future as tangled as a large plate of spaghetti.

The city’s Public Incentives Review Committee rejected on a 4-3 vote a request for a property tax rebate for the project that would build on a vacant lot at 27th and Iowa streets.

“At this point, we just don’t know what we’re going to do,” said Matthew Gough, a Lawrence attorney representing the Kansas City development group that owns the property. “We need to sit down and evaluate where we are at.”

Future murky

The decision wasn’t the final one for the project. City commissioners still could vote on the request. But two city commissioners — Mayor Aron Cromwell and Commissioner Bob Schumm — serve on the PIRC board, and both voted against the request. Because of a conflict of interest by City Commissioner Mike Amyx, only four city commissioners will vote on the request — meaning either Cromwell or Schumm will have to change his mind in order for the request to have a chance with the City Commission.

Cromwell left some question about whether he could be persuaded to think differently. He indicated he was torn by the request, saying he was “at a five on a scale of one to 10.”

Schumm, who is a longtime restaurant owner in downtown, left no such doubt.

“The applicant’s admission is he paid too much for the property,” Schumm said. “To the public, this just looks like a bailout.”

The applicant argued that the vacant property is in need of redevelopment, and that an Olive Garden restaurant would give the city a major sales tax boost. The restaurant is expected to generate about $5 million in sales, and Olive Garden estimates 40 percent of the sales would be new business to Lawrence, rather than just sales that are taken from other Lawrence restaurants.

Cromwell and Schumm both questioned those numbers. But the developer — M.D. Management — said that even if the percentage fell to 20 percent, the city’s own analysis showed that the city still would receive $1.27 in benefits for every $1 in costs the project created.

Other incentives?

County Commissioner Mike Gaughan voted against the incentives request — which sought 10 years of partial property tax rebates through the Neighborhood Revitalization Act. But Gaughan said he thought the project could be a financial benefit to the community if it used a different type of incentive.

He suggested the city consider allowing the development to form a Community Improvement District, which would allow for the creation of a special sales tax that would go to the development group.

Gaughan said he understands the idea of a special taxing district is opposed by some members of the public, but he said special signs alerting all customers that a higher sales tax is charged could help alleviate some of the concerns.

Cromwell, though, said he still views the idea of special taxing districts as extremely unpopular with the public.

Other members on the PIRC include: former City Commissioner Rob Chestnut, outgoing school board member Scott Morgan, and local banker Brad Burnside, who all voted for the incentives package. Former City Commissioner Boog Highberger voted against the package, joining Cromwell, Gaughan and Schumm.

Downtown incentives approved

In other business, the PIRC approved, on a 6-1 vote, $280,000 worth of incentives for a new downtown apartment, office and retail building. Highberger opposed the request.

PIRC members said the seven-story building at Ninth and New Hampshire streets would be a good addition to downtown, and would boost business by bringing more residents to downtown.

The committee also sided with the developers — a group led by Lawrence businessman Doug Compton — who said the project should receive $280,000 in property tax rebates to help pay for public improvements such as sidewalks, sewers and streetlights.

The property is part of a Tax Increment Financing district that was formed in 2000. At that time, city commissioners said future private developments could be eligible to receive tax rebates for public infrastructure expenses.

PIRC, however, did recommend that the $280,000 be paid out over a 10-year period, beginning in 2013. The development group also had asked for reduced parking rates in the adjacent public parking garage. PIRC did not consider that request Thursday.