Archive for Wednesday, June 1, 2011

Town Talk: Olive Garden eyeing South Iowa site, but wants tax break; 100 degree heat could win you a car; southeast Lawrence roadwork

June 1, 2011

Advertisement

Subscribe to the Town Talk email edition

Subscribe to the email edition of Town Talk and we'll deliver you the latest city news and notes every weekday at noon.

Reader poll
How often would you eat at Olive Garden if they opened one in Lawrence?

or See the results without voting

News and notes from around town:

• The Olive Garden is becoming serious about building a restaurant on South Iowa Street, but it appears city commissioners will have to be willing to provide the development a property tax break to get the deal done.

As we previously reported, the Italian restaurant chain is considering a location at the northeast corner of 27th and Iowa streets. A representative for a Kansas City area development group that controls the property confirmed this week it is in negotiations with Olive Garden officials.

“They are very interested in the site,” said Matt Gough, a Lawrence attorney who is representing MD Management Inc.

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 new development to be used to help pay for improvements at the site.

“It is absolutely essential,” Gough said of the provision.

MD Management officials are expected to formally request that the city use the Neighborhood Revitalization Act to spur the development at the site — which includes the corner lot that used to house a Mazzio’s pizza place and two other lots that previously housed a Chinese restaurant and a chiropractor’s office. City officials recently agreed to use the Neighborhood Revitalization Act to entice Lawrence-based Treanor Architects to move its headquarters downtown.

The act sort of 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. But the act — which has been in existence for many years but is new to Lawrence — stipulates that not all of the property taxes can be rebated back to the development. Specifically, the site must generate at least as much in property taxes as it did before the project occurred. In this case, it appears the site is generating about $53,000 a year in property taxes. The city, county and school district would continue to receive at least that much in property taxes. But the NRA would allow all or a portion of the property taxes over and above that amount to be rebated back to the development, perhaps for 10 to 20 years.

But, unlike other incentives proposed for retail projects in Lawrence, this deal does not include any use of a special sales tax district. It previously was speculated that the development group would seek use of a Community Improvement District that would charge customers and extra 1 percent or 2 percent sales tax to help pay for the development. But after the April City Commission elections, it became clear that such special taxing districts would face opposition at City Hall.

Top vote-winner Bob Schumm ran a campaign that called the special districts “sneaky taxes” and struck a chord with voters on the issue. But, the idea of using the Neighborhood Revitalization Act to attract new retailers didn’t receive much discussion during the campaign.

I’m guessing this is going to be a real interesting issue to watch. Already, I’ve heard some people say this project is a better deal for the city than the Treanor Architects project. That project wasn’t attracting a new business to town — instead it just moved it from one area of town to another — and it didn’t bring any new sales tax dollars to the city. In this case, that could be significant. According to estimates I’ve seen, an Olive Garden in Lawrence is expected to generate about $5 million in annual sales. That would result in about $125,000 a year in sales tax collections for the city and the county.

But unlike the Treanor project, this development doesn’t center around fairly well paying architecture jobs. But it will produce new jobs. An Olive Garden likely would employ about 75 full and part-time employees, but I would not be surprised to hear discussion about whether the jobs pay enough to justify a property tax break. Currently, companies that apply for a traditional tax abatement in Lawrence must pay a living wage, which is more than $9 an hour. That’s not currently a requirement with the Neighborhood Revitalization Act.

And finally, I expect to hear from some other local restaurant owners about whether a property tax break to one restaurant creates an unlevel playing field in the restaurant industry. That will be a particularly interesting discussion, given that Commissioner Schumm is in the local restaurant industry.

• While we’re talking about sales taxes, Lawrence got a nice boost earlier this year. As we reported, the Briggs Auto Group was successful in bringing a Chrysler, Dodge, Jeep and Ram dealership back to the city. Having that major auto brand back in town will help with sales tax collections. There’s nothing quite like auto sales to boost the city’s sales tax take. As one longtime budget-maker at City Hall says: It takes a lot of T-shirt sales to equal one car sale. Anyway, Briggs is making a splash back into the market. It is promising to give away a car this summer. All you have to do is guess the day that it will first reach 101 degrees in Lawrence. If nobody guesses it exactly, the person closest to the date will win. Up for grabs is a 2003 PT Cruiser. Briggs has set up an official thermometer on its Web site to be the arbitrator in this contest. To enter, go to briggsauto.com. Be prepared to not only guess the date, but also the time. That will be used to break any ties.

• Here is an area to avoid in southeast Lawrence for a few days. City crews will have the 2700 block of Ponderosa and Bonanza shut down this week for patching and mill and overlay work. No through-traffic will be allowed on the two residential streets. The streets are expected to reopen next week.

Comments

Bud Stagg 3 years, 10 months ago

So is Olive Garden creating new jobs or just closing down a competitor and shifting jobs? I don't think taxpayers should subsidize competition and give an advantage to one resturant or another. Did Chili's or Applebee's get this tax break? Now if we were bringing in a new type of industry or it could be demonstrated that these were indeed new jobs, I'm all for it.

jafs 3 years, 10 months ago

If the new business isn't paying the same taxes that the others are, it's not a level playing field for the competition.

funkdog1 3 years, 10 months ago

If Olive Garden is competitive, they don't need a tax break.

puddleglum 3 years, 10 months ago

"If Olive Garden is competitive, they don't need a tax break"

my thoughts exactly.

Lindsey Buscher 3 years, 10 months ago

"...the site must generate at least as much in property taxes as it did before the project occurred."

That site is suited for a restaurant and regardless of which restaurant locates there, some form of public-private partnership is necessary because that site is a blighted eyesore.

No private corporation could possibly afford to fix that site up and as long as there is not a net dip in property taxes collected, then I think a partnership should happen in order to remove blight.

jafs 3 years, 10 months ago

Ok.

By the same logic, if I buy a house and fix it up, employing a variety of people to do that, helping the local economy (which I have done a few times), I should get to pay the same taxes on the property for 10 years that the previous owner did.

Especially if I buy a house in need of work, in a less than ideal neighborhood (which I have also done).

What's your evidence that no private business could afford to improve the site?

Lindsey Buscher 3 years, 10 months ago

There are all sorts of subsidies, tax credits, breaks and deductions available for homeowners, particlurly those who buy delapidated old houses in blighted neighborhoods.

And my evidence that no private business could afford the cleanup is simple...just go look at the property and then try to prepare a pro forma.

There will be all sorts of remidiation, rehabilitation, landscaping, and demolition costs that are not typically factored into sources and uses, which would make almost any project infeasible, not just unprofitable.

In fact, I would be willing to bet that without a private-public partnership any restaurant at that location could not break even.

So what does the public get out of this partnership?

Well, a public-private partnership in this case means that we get an attractive looking property along a major thoroughfare; the restaurant pays for fixing up a blighted eyesore by meeting all of the Lawrence Commercial Design Guidelines, and the City collects no less in property taxes than it did when it was just a dump at the corner of 27th and Iowa.

somedude20 3 years, 10 months ago

Olive Garden, you can have your tax break but every Tuesday will be free pizza and breadsticks day for all who have a Lawrence address on their drivers license

pinecreek 3 years, 10 months ago

Hmmmmm...this is a very bad precedent to set. Given the number of restaurants already in place in Lawrence (and the amount of existing vacant commercial space besides this location), this could start a free-for-all. If Olive Garden really wants to access this market and its residents, they won't need to have this tax break to make it happen.

jlzack 3 years, 10 months ago

I would have to agree pinecreek. it's not as if Lawrence has a shortage of restaurants.

jafs 3 years, 10 months ago

I say no.

You know, there was a time that businesses paid for building their own buildings.

Government should pay for things that are in the common good, like streets, not things that are private, like construction for new restaurants.

CreatureComforts 3 years, 10 months ago

And Olive Garden may be common, but it's definitely not good!

Jake Esau 3 years, 10 months ago

I thought you paid for sales taxes for a car wherever you registered the car, not where you bought it. I had to pay the sales tax for my car in Johnson county even though I bought it in Wichita, because it was registered in JOCO.

BigPrune 3 years, 10 months ago

These are the same people (not olive garden) that wanted a sales tax to pay for costs associated with the old 23rd Kwik Shop, Jimmy John, Hobby Lobby. I wonder how they got rich?

tolawdjk 3 years, 10 months ago

Maybe someone here can explain something.

When I've seen these types tax breaks discussed before it is always the same. 10-20 years of abaitment with the differential used to offset the cost revitalization.

But how long does a commercial property go before it needs to be rebuilt/updated? Don't you end up with the situation in 10-20 years of a now delapidated abused property needing more capital sunk into it to revitalize the space? Doesn't your original tenant now look for the same deal to revitalize or a move to a new spot to start over? You end up with either a vacant property, again, and at a higher actual property tax bill, or another 10-20 year deal at tax rates of 20-40 years ago.

Maybe I don't understand commercial property that well, but I have to think that after 10-20 years, a restaurant space is going to need some serious work done to it to get back up to being presentable.

What is the current assesment on that property? Does $125,000 in sales taxes offset the potential lost differential in property taxes?

jesse499 3 years, 10 months ago

I'm sure the old dump building that is sitting there now with no one in it is helping alot more and you know our city fathers will agree.

dipweed 3 years, 10 months ago

When you're at Olive Garden, you're family. Therefore you don't have to pay.

average 3 years, 10 months ago

Do this for Darden (Olive Garden) and there will NEVER be another new thing in this town that doesn't beg and extort for the exact same thing. Greenfield or redevelopment.

kernal 3 years, 10 months ago

Is Olive Garden THAT good that we would consider a tax break? From what I've heard, it's not.

jhawkinsf 3 years, 10 months ago

All the talk about Brownback, it's about jobs, jobs, jobs. Now posters are complaining about a business wanting to come here and create 75 jobs. But, no, local government should not provide a climate conducive to making that possible. Maybe taxes here are too high. Or maybe the state is struggling with creating that environment, just as our city struggles. Of those 75 jobs, how many servers, cooks, bus people live locally and will spend their wages in local stores, who will then need to hire more people? Again, the city needs to conduct an independent study of the costs and benefits to the city. Then do what makes sense for the city. That might be giving tax abatements. It might mean not giving those abatements. They might recommend a lowering of business taxes. But holding firm to some ideology even when it doesn't make economic sense is like cutting off your nose to spite your face.

Bud Stagg 3 years, 10 months ago

Is it creating 75 jobs or just moving them from other resturant(s) who will later downsize or close because the resturant market is saturated? We don't need more resturants or retail in this city, we need more industry, commercial types of jobs. Those are higher paying jobs to bring people in who buy houses and spend more money in the retail and resturants. Then you can build more resturants and retail.

Building more retail and resturants is like canibalism. We need to build the economy here, not have profits taken out by olive garden and the like. This tax abatement does not help us locally, it gives a profit to the corporate entity in Orlando, FL. Give a tax abatement to someone who is going to build a factory or coroporate headquarters here.

jhawkinsf 3 years, 10 months ago

Having industry coming here would be great. I'd even like for a Toyota plant to come here, employ hundreds even if some of the profits go to Japan. But that's not an option that I'm aware of. What is an option is that a restaurant is willing to develop a blighted property and employ 75 people. They will pay sales taxes to the city while the workers will spend their wages in local establishments and they will pay an increased sales tax. Nearby properties will see their values increase and they will pay increased taxes. Or we can leave the property as it is and hope that maybe, someday, someone will do something with it, maybe. And the 75 jobs, they can leave town along with the 65 jobs we lost last week.

dinglesmith 3 years, 10 months ago

There is a strong argument for exactly the position that you're taking. Get the company in, create jobs, and generate revenue from those jobs. Ideally, the taxes generated from those jobs would outweigh any tax abatement for the company. Also an argument for reducing corporate income taxes.

Here's the problem. The current anti-tax crowd argues that all taxes are evil and "job killing". Thus, they will lower taxes on businesses to get them in, then lower sales and personal taxes. We need to decide how we are going to generate revenue. Will we continue to tax progressively or move to flat or sales taxes? Will we continue to pay for services such as education, roads, and social services as a society or as individual consumers? The only answer that is not sustainable is generating no revenue and unfortunately that is the only answer that is allowed in our current government. Don't tax anyone or anything, don't let the Universities raise tuition, don't let the public schools raise revenue locally, don't allow more turnpikes and toll roads. It's odd that those who complain about socialism the most also don't want to pay for anything...

jhawkinsf 3 years, 10 months ago

I'm certainly not in the school of thought that says all taxes are bad. Nor am I thinking that all assistance given to business is "corporate welfare" and should be shunned like the plague. A well reasoned approach should be taken, weighing the costs and benefits to the city, then make a smart decision.

jafs 3 years, 10 months ago

Maybe they're just greedy.

Nobody's complaining that they want to locate here - they're complaining about the request for tax money to go towards what are business expenses.

You know, the Oread hotel project would have made a profit without any tax incentives - it just wasn't a high enough profit for the developers.

jhawkinsf 3 years, 10 months ago

Sure they're greedy, everyone is. If they invest one dollar and get a penny profit, they won't do it. If they get a quarter profit, they will. Greed probably lies somewhere in the middle. Where? And if they don't come here, then what? The property becomes blighted. Surrounding businesses will leave. Property values go down. The city loses revenue.
We're not talking about a perfect world where everyone acts in the best interests of everyone else and that behaving as such, it's in your own best interest as well. We're talking real world.

jafs 3 years, 10 months ago

Everyone is not greedy - that's a bit of an absurd generalization.

Are you greedy?

Self-interest is not greed - we've had that conversation before.

jafs 3 years, 10 months ago

Also, if you acknowledge that it is greed driving the developers and businesses who ask for tax incentives, then granting them is pandering to their greed. which is rather unpalatable to me.

LogicMan 3 years, 10 months ago

Is the new, long-vacant building in front of Home Depot of acceptable size for the Olive Garden? If so, it would allow them to open much more quickly.

redwombat 3 years, 10 months ago

I am sure that Olive Garden would rather own their own building rather than be a tenant. And those spaces south of Home Depot are $32/sq foot. Which means NO ONE can afford it. They will sit empty until the owner of those buildings realize that NO ONE can afford it. They've been empty going on 5 years now. Guess the owners have very deep pockets.

Scott Morgan 3 years, 10 months ago

Run off Olive Garden, or how about giving all businesses a tax break. If I were in charge I would do the deal yesterday and put the word out Lawrence is business friendly again.

jesse499 3 years, 10 months ago

These aren't lifetime tax breaks you do it to get these places in town it pays you back down the road if you don't they don't come here and you end up going to Topeka or KC to get what you want and giving them your sale taxes and jobs. if we don't do it Topeka or KC. will.Tthen what will you bitch about the fact that we don't have anything in Lawrence I bet.

average 3 years, 10 months ago

"These aren't lifetime tax breaks".

20 years might as well be. When that expires, they'll beg for a new tax break at some other location. And someone else will beg for a tax break to redevelop that 20-year-old dilapidated location.

Once you start shooting heroin, feeling a natural high is impossible. Once you start the 'incentives', natural free-market growth is impossible.

Bud Stagg 3 years, 10 months ago

"if you don't they don't come here and you end up going to Topeka or KC"

I don't disagree with giving astronomical tax incentives for "new" business. But is a new resturant creating new buisness or new tax base or just moving it across the street? That is the question I am trying to raise.

We have had chances at distribution centers, industry, etc that we have run out of town. Right now I don't see retail or food being a huge solution here, that just taxes the citizens that are already here and brings in a few out of towners. However attracting companies that bring in 50 or 100 "new" high paying jobs is what we should be doing. Letting the engineering firm move to Olathe was a HUGE mistake. Letting Olive Garden build a new building with incentives that another resturant does not get is not a good move. This is savings they use to put another resturant out of business because they are splitting the already thin dining dollar by another share. This is not a good use of our tax incentives. If Olive garden wants to come to town, let them come and compete on a level playing field. Or else give every competitor the same break.

geekin_topekan 3 years, 10 months ago

75 jobs of what caliber? More service jobs that provide a less than livable wage?

If they just want to surf on the transient/student labor, then they are getting all the breaks they deserve through their less than livable wages and need nothing from the taxpayers. Residents are already rewarding by presenting them with non-tax-producing workers.

If they promised wages where a person could raise a family, own a home and save for retirement, ultimately producing more taxpayers, then I would be all for breaks. But they are not. They are asking Lawrence residents to let them slide on their tax bill so that they can prey on student labor.

jafs 3 years, 10 months ago

Good points.

We offer a large pool of young workers, who will work part-time jobs without benefits, and a large pool of customers.

That should be enough.

puddleglum 3 years, 10 months ago

are you kidding? I have a Masters in dishwashing and it has really gotten me far. I know how to clean a dish AND a fork. I also clean toilets...and, as I understand it, I really have a future! talk abot job security! no one wants my job

bad_dog 3 years, 10 months ago

Job security is realized only if you first dirty the dishes, then the toilet, puddle.

Now get back to work!

sherbert 3 years, 10 months ago

My first response was to do whatever it takes to get Olive Garden here. We need more restaurants and a large chain like this coming to town might open doors for more. We badly need the restaurants and the jobs. BUT, I agree, it's not fair to the smaller businesses like Paisano's who will lose business because of them and has to pay their full taxes. Tough call.

MarcoPogo 3 years, 10 months ago

"We need more restaurants"

Now THAT might be the funniest post of the day.

funkdog1 3 years, 10 months ago

Teller's, Bambino's, Paisano's, 715, The Basil Leaf Cafe, Genovese ... I'd NEVER go to Olive Garden. Bleh!

jafs 3 years, 10 months ago

Well, Paisano's seems to have been slipping, in my experience.

And, Teller's and Genovese are much more expensive than the Olive Garden, while Bambino's isn't that great either, although they've improved somewhat.

irvan moore 3 years, 10 months ago

how about the city give us long time property owners a tax break?

tolawdjk 3 years, 10 months ago

Would you take it in the form of all you can eat breadsticks and salad?

RStakun 3 years, 10 months ago

How bout giving a local place like the Basil Leaf Cafe a break so they can have a stand-alone restaurant. I'd eat there any day over Olive Garden...

cowboy 3 years, 10 months ago

Do it , it is a net gain for the city and county , you get the same dollars in property tax as youre now receiving and you are getting an increase in sales tax revenue not to mention putting some life into that dead intersection and the additional jobs that will be created in construction and the ongoing operation. This is a no brainer.

pizzapete 3 years, 10 months ago

I thought the Olive Garden was a big enough corporation to pay for their own building improvements. It's something all businesses must pay when they open a new business. Didn't they plan for this? I'd be for this tax help if they agree to pay a living wage and the incentive was reduced to 5 years. I would hope some compromise could be reached rather than them getting an unfair advantage or they decided not to come here. Any well paying jobs added by a compromised solution would be a major benefit to the city.

kernal 3 years, 10 months ago

If we give Olive Gardens the requested tax break, leaving the existing restaurants out in the cold, what's to prevent the existing restaurants from grouping together and hiring an attorney?

Like, you know?

optimist 3 years, 10 months ago

This is a prime example of the t type of business that we don't need to give tax incentives to. This business doesn't bring tax dollars from outside the community, it rather takes them out. I am as pro business as they come but logic has to come in to play here. If Olive Garden wants to come into this community and compete for our expendable cash then they should but we shouldn't have to pay the property developers thus subsidizing them or Olive Garden for that matter. I like Olive Garden but I'm betting I'm not gong to get a discount on my meals when I go there.

I would like to see tax incentives used to draw in businesses that will produce goods and services to be sold outside of the community bringing disproportionate benefit in the way of jobs to the community with salaries being funded by revenue from the sale of those goods to other parts of the country or preferably the world.

grimpeur 3 years, 10 months ago

This is what happens when cities race to the bottom. Pretty soon, if you're not a corporate welfare sugar daddy town, giving tax breaks left and right, you get labeled as "business-unfriendly" if you don't. Oh, yeah, and the citizens pay for it.

Adrienne Sanders 3 years, 10 months ago

Olive Garden is so gross. But tons of people love it and will flock to it... I don't think they really need a tax break.

Scott Morgan 3 years, 10 months ago

But tons of people love it and will flock to it Not so sure folks want to flock to another half-butt start up bar. So many of these in Lawrence.

flocking people come to Lawrence, or as the Wismos for example not leaving Lawrence to shop. They pay flocking taxes, and when business is good they hire flocking extra workers, this may lead to other legit businesses flocking to Lawrence.

Olive Garden/Red Lobster nibbling folks know the pricing, know the menu somewhat making it a comfortable choice.

Scott Morgan 3 years, 10 months ago

Because people like me are leaving Lawrence to purchase big ticket items. At least 6 times a year I head to Topeka or JOCO and do some serious shopping. Have you not read about our declining tax revenue?

Scott Morgan 3 years, 10 months ago

Memory for names not good, but here goes.

K Mart, a larger real Sears, Payless Cashways miss this place big time, the discount appliance store on 23rd now a furniture store, (puchased many big items there including a big screen) loved the place, the little restaurant next to Holiday Inn Express which had great crab cakes Chicago style menu, also like Food for Less,

shall I move north of 23rd street or is this enough?

Miss Molly McGee's too.

hujiko 3 years, 10 months ago

The only thing in your list of any practical value is Payless Cashways.

Everything you can get at KMart is also available at Walmart and Target, we have both a JCPenney and Sears so you shouldn't need to leave Lawrence in lieu of Topuka or KC, Checkers is far superior to Food 4 Less, and Uno's just plain sucked (horrible food and service).

Scott Morgan 3 years, 10 months ago

How about the fact I would like to choose where the heck I want to shop.

Not alone in my thinking, revenues are down in Larrytown.

This thinking is the major problem, and the reason Lawrence is going down the tubes.

I do not like Walmart, and despise Target. I shopped at K-Mart since I was a child and like it. Checkers is poorly laid out and the isles are far too narrow.

You goofs have no idea what free enterprise is do you? Italian Gardens has the clout to demand tax breaks.

McHippy Fish Shack, formerly a sub shop, formerly a guy who lives down the block candle shop doesn't. Perhaps when McHippy invests in expansion then incorporates hiring hundreds of high paid employees they can go into a town and expect favors.

Scott Morgan 3 years, 10 months ago

Wow, good argument. Maybe you should spread the word to all the folks leaving Lawrence to shop elsewhere.

Scott Morgan 3 years, 10 months ago

The little electronic store was a Rex. Jam packed with good priced high quality merchandise. They delivered too.

somebodynew 3 years, 10 months ago

Hey Wisso - "You goofs have no idea what free enterprise is do you? Italian Gardens has the clout to demand tax breaks."

Not too sure I would call it FREE enterprise if someone is getting breaks on their taxes and the other similar places aren't.

OH, and by the way "Italian Gardens" closed up years ago. Was a great place too in KC.

Scott Morgan 3 years, 10 months ago

My mind was on an article about DiCapo and his alleged sleazy involvement in the KC WW1 Museum. He was involved in Italian Gardens. Great joint in it's time.

somebodynew 3 years, 10 months ago

Can't argue that (Italian Gardens), can't say the same for Olive Gardens tho. If I were a current restaurant owner (and particularly in that area) I would be mad as **** if the City did this.

Scott Morgan 3 years, 10 months ago

I really like Lawrence. My feeling is when large chains do not wish to just build or open without a little slap and tickle the city has slipped.

I can see on one side not wishing to give special favors, on the other the need to do so.

ivalueamerica 3 years, 10 months ago

I actually really love Olive Garden.

That being said, if they want an unfair advantage over existing businesses and want me to subsidize them by covering their share of taxes, I will tell them where to stuff their neverending breadsticks.

LivedinLawrence4Life 3 years, 10 months ago

I'm for the tax break only if they give every Lawrence building owner the same break!

jafs 3 years, 10 months ago

In my experience, there are plenty of stores to shop at in Lawrence.

The problem has more to do with customer service, intelligence, and quality of sales help, I'd say, and seems pretty consistently bad at many stores in town.

Commenting has been disabled for this item.