The home of the never-ending pasta bowl soon may provide the next chapter in what seemingly has become Lawrence’s never-ending debate:
How much should City Hall do to lure businesses to town?
Development and City Hall leaders confirmed Wednesday that officials with the Olive Garden Italian Restaurant are considering a South Iowa Street site for a restaurant but said a property tax break will be needed to get the deal done.
The national chain is in discussions with Mission-based MD Management about a site at the northeast corner of 27th and Iowa streets, a vacant corner that once housed a Mazzio’s pizza shop and a Chinese restaurant.
“They are very interested in the site,” said Matt Gough, a Lawrence attorney who is representing MD Management.
But Gough said the project won’t get done unless city, county and school district officials agree to allow some of the property taxes generated by the development to be used to help pay for improvements at the site.
“It is absolutely essential,” Gough said of the provision.
Neighborhood Revitalization Act
MD Management officials are expected to request that the city use the Neighborhood Revitalization Act to spur the development. City commissioners recently agreed to use the Neighborhood Revitalization Act to entice Lawrence-based Treanor Architects to move its headquarters downtown.
The act functions like a tax abatement, but not quite. Unlike a tax abatement, the development would pay 100 percent of its property taxes each year. But it then would receive a rebate on a portion of those property taxes. The act, however, stipulates that not all of the property taxes can be rebated back to the development. Specifically, local governments must receive at least as much in property taxes from the site as they did before the project occurred.
Details about how large of a rebate or for how many years the development group would seek a rebate haven’t been set. But the issue already was creating divisions.
Doug Holiday — an owner of Biggs BBQ and the president of an organization that markets locally owned restaurants — said the more than 20 restaurants in the Lawrence Originals group are against the idea of a tax break for the development.
“If they want to do it, let them do it on their own dime, not on the backs of taxpayers,” Holiday said. “If you start giving tax incentives to chain restaurants, there won’t be any local restaurants. Lawrence would become like Olathe, where it is hard to find a locally owned restaurant.”
City commissioners also are likely to be divided on the issue. City Commissioner Mike Dever said he is open to hearing more about the proposal. He said the request for a tax break has come about likely because the development group overpaid for the piece of property. Now it needs the tax break in order to offer the property at a lease rate that is in line with the market. Dever said he can understand why the public may be hesitant to grant such a request, but he also said the city has to be concerned about whether Olive Garden would seek to build in another location that would be less desirable from a planning standpoint.
“Do we want to force them to the outskirts of the city where land costs may be less right now?” Dever asked. “Or do we want to try to encourage infill development and the revitalization of what should be an important intersection in our community?”
If approved, the restaurant is expected to employ about 75 full- and part-time workers and generate about $5 million in annual sales. Based on current tax rates, the city and county would collect about $125,000 in sales taxes off of those sales, although existing restaurant owners argue the sales would come at the expense of their businesses.
City Commissioner Bob Schumm said he’ll be hard pressed to support a tax break for the project. Schumm — who is a downtown restaurant owner and also is a member of the Lawrence Originals group — said the Iowa Street corridor has been developing fine without tax subsidies. He pointed to the recently completed project to convert the former Food-4-Less grocery into a furniture store and the new Freddy’s Frozen Custard at 23rd and Iowa.
“Logic tells you that site is very likely to get developed all by itself,” Schumm said. “I just don’t see a need to subsidize a national restaurant chain in Lawrence, Kansas. The market certainly is not underserved.”
The City Commission also likely will be operating short-handed on the issue. City Commissioner Mike Amyx said he plans to recuse himself from the discussion. One of the four lots that is part of the development proposal was owned by his parents before they sold it to MD Management. But Amyx said he does want the commission to have a broader discussion on what the city’s role should be in trying to spur retail development.
“Let’s just call it like it is,” Amyx said. “This is the first time we are starting to look at incentives for retail. In the past we have looked at tax abatements and such for industrial development and big job producers. But this issue of incentives for retail creates a new set of questions.”