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Archive for Wednesday, June 15, 2011

Public Incentives Review Committee to assess Olive Garden retail tax break option

An empty lot at 27th and Iowa streets could be the new home of an Olive Garden in Lawrence.

An empty lot at 27th and Iowa streets could be the new home of an Olive Garden in Lawrence.

June 15, 2011

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A plan that would add Olive Garden to the menu of retail offerings along South Iowa Street will get a hearing before an administrative committee that weighs applications for tax incentives, Mayor Aron Cromwell said Tuesday.

At issue is what developers are calling an “essential” component of the project: using a share of increased property taxes to help finance what would be a private development, one envisioned for the northeast corner of 27th and Iowa streets.

Called into duty will be the Public Incentives Review Committee, which typically assesses potential tax abatements for multimillion-dollar industrial, warehouse or bioscience projects often expected to generate hundreds of jobs.

But Tuesday night, members of the Lawrence City Commission found themselves mulling whether a less-prominent public incentive — the Neighborhood Revitalization Act, thus far used only twice in town — would be appropriate for helping draw a national chain restaurant to a commercial corridor that already is home to the city’s largest retailers and several other national chain restaurants.

Cromwell, who serves on the review committee, said that the committee’s upcoming review would hinge on a number of variables that need further study. Among them: claims that an Olive Garden at the corner would generate $5 million in annual sales and that the restaurant would “cannibalize” relatively few sales from existing restaurants and other retailers.

Staffers still have work to do on their analyses, Cromwell said, and a date for the review committee’s meeting has yet to be set. Once reviewed, the development plan would go the City Commission for a decision.

Cromwell, for one, remains unsure about whether or how the city should invest in retail projects.

“I haven’t made up my mind on that yet,” Cromwell said, after Tuesday night’s meeting at City Hall. “I don’t think that it’s an easy decision. We have to make sure that we’re using our tools wisely. We are talking about the public’s money.”

Among his fellow commissioners, only Commissioner Bob Schumm — himself a restaurateur, as owner of Buffalo Bob’s Smokehouse and the Dynamite Saloon downtown — indicated a clear direction on the issue Tuesday night. His take: Such incentives should be reserved only for truly “unique” projects, ones that couldn’t occur otherwise.

On Iowa Street, he said, plenty of other retailers have opened or made upgrades without tax assistance:

• Walmart, 3300 Iowa, acquired the former Payless Cashways, then swapped property with Crown Automotive to make room for an expanded Supercenter.

• Freddy’s Frozen Custard, at the northeast corner of 23rd and Iowa streets, replaced the former Sheridan’s Frozen Custard.

• Discovery Furniture, 2525 Iowa, moved into the former home of Food 4 Less.

“I have a real philosophical problem using taxpayer money to support a chain restaurant on Iowa Street,” said Schumm, appointed Tuesday night by Cromwell to serve on the review committee. “I don’t think this act, the Neighborhood Revitalization Act, is designed to bring in chain competition to Lawrence, Kansas, at the taxpayers’ expense.”

Specific financial details of the plan to attract Olive Garden have not been disclosed, but the revitalization act would permit the developers to use at least some of the increased property taxes generated by the project to help finance the project itself. The city and other taxing jurisdictions would still receive at least as much tax revenue as the site generates now; only portions of the increased tax revenues, or increment, would be available for private use.

The corner is a former home of Mazzio’s Pizza, plus a former Chinese restaurant.

Commissioners decided Tuesday night to discuss the Neighborhood Revitalization Act and other public incentives during an upcoming commission meeting. The goal: Determine whether commissioners want to tighten standards or set clear guidelines for the use of such incentives.

Comments

Bob Forer 3 years, 6 months ago

Cromwell: "I don’t think that it’s an easy decision."

What's so tough about it, Cromwell? Its an unfair corporate giveaway that has almost unanimous opposition, at least based on the LJW public forum comments.

My answer is an resounding no. Its a no-brainer.

right_down_the_middle 3 years, 6 months ago

LJW public forum comments represent EXACTLY NOTHING about public opinion at large. It is the same 15 of you who comment on everything. U, Bozo, Merrill, et al. You don't represent anything but yourself.

Bob Forer 3 years, 6 months ago

Seems like you enjoy reading our comments, as you are familiar with our names. Thanks for being a fan.

Richard Heckler 3 years, 6 months ago

US Housing Crisis Is Now Worse Than Great Depression

by: Jeff Cox CNBC.com Staff Writer Published: Tuesday, 14 Jun 2011 | 12:04 PM ET

It's official: The housing crisis that began in 2006 and has recently entered a double dip is now worse than the Great Depression.

Prices have fallen some 33 percent since the market began its collapse, greater than the 31 percent fall that began in the late 1920s and culminated in the early 1930s, according to Case-Shiller data.

The news comes as the Federal Reserve considers whether the economy has regained enough strength to stand on its own and as unemployment remains at a still-elevated 9.1 percent, throwing into question whether the recovery is real.

"The sharp fall in house prices in the first quarter provided further confirmation that this housing crash has been larger and faster than the one during the Great Depression," Paul Dales, senior economist at Capital Economics in Toronto, wrote in research for clients.

According to Case-Shiller, which provides the most closely followed housing industry data, prices dropped 1.9 percent in the first quarter, a move that the firm interpreted as a clear double dip in prices.

Moreover, Dales said prices likely have not completed their downturn.

"The only comfort is that the latest monthly data show that towards the end of the first quarter prices started to fall at a more modest rate," he said. "Nonetheless, prices are likely to fall by a further 3 percent this year, resulting in a 5 percent drop over the year as a whole."

Flap Doodle 3 years, 6 months ago

How many threads did you spam today with this same text, merrill?

Kyle Chandler 3 years, 6 months ago

As much disdain i have for republicans, just a bit less for democrats. Merrill geez, this is about a freaking Olive Garden.....stay on topic here. You would be a bit more effective and less dumbocratty if you kept it short and sweet (er spicy). You give the Right what they want....endless lessons that are likened to Microsoft Alerts in VISTA/WIN7. Just a thought....post on

Richard Heckler 3 years, 6 months ago

There is not a great job market in Lawrence,too many eating establishments aka flooded market = economic displacement = unfriendly to business and unfriendly to taxpayers.

There is nothing special about one more fast food eatery. MD management paid too much for Lawrence property = not my problem.

Lawrence, Kansas cannot afford corporate welfare!

Here’s what happens. http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

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

If business is slow like the nationwide economy how will taxpayers ever get their money back? Corporate welfare is reckless use of our tax dollars.

Want jobs? Hey use our tax dollars to fix all of the broken down sidewalks in Lawrence,Kansas = increased property value throughout older Lawrence = Dollars and Sense. This would keep local workers busy for at least two years. Money well spent because it's coming directly back to the local taxpayers.

gl0ck0wn3r 3 years, 6 months ago

Merrill hates private sector jobs but loves public sector jobs if they directly benefit his neighborhood.

Kyle Chandler 3 years, 6 months ago

Merrill just hates Republicans.....and thats alright.

gl0ck0wn3r 3 years, 6 months ago

No, he hates Mexicans, Jews and the environment as well.

tbaker 3 years, 6 months ago

You assume the customer base is a zero sum game. It is just as easy to assume the market has grown to the point it would support a new resturant, creating a net increase in jobs. If you don't prove your assertion, I am just as likely to be right.

jafs 3 years, 6 months ago

It is up to developers who seek tax breaks and other favors to prove that they will be creating new, and good, jobs, imho.

LogicMan 3 years, 6 months ago

No tax break, but please come to town and we'll help you find another site if that one's not acceptable. Take a hard look at the new, vacant building in front of Home Depot, for example.

LogicMan 3 years, 6 months ago

There's some. A small restaurant, and so fewer needed stalls, would be right for Lawrence.

average 3 years, 6 months ago

The difference is that the tax break to Olive Garden would be adding competition for dining dollars to the many dozens of Lawrence restaurateurs who do pay their damned taxes. Causing, eventually, job losses in those other restaurants. More jobs in places that don't pay their taxes, fewer jobs in places that do = a net loser.

ARRA road projects aren't displacing some existing alternative private-sector road network (by and large... theoretically you could say that improved highways might reduce rail traffic for the UP, but it's a big stretch).

jafs 3 years, 6 months ago

It would be better if they stopped calling this the "Olive Garden tax break", since reporting on the subject has indicated it's actually the developers of the property who would benefit, and that OG would be paying market rates to rent the space from them if the tax breaks are approved.

stuart 3 years, 6 months ago

It doesn't really matter, the savings are passed on to the Olive Garden. In one pocket and out the other. Why should MD managment get a corporate bail out? Lots of people have gone upside down in their real estate investments, sorry that a Walgreens did not go there like they had speculated. Don't you wish you could change your bet after it had been placed and you saw the results? That is what MD wants us to do for them.

jafs 3 years, 6 months ago

I am against the tax break.

But if OG is paying market rent for the space, they're not getting a "break".

average 3 years, 6 months ago

Yes, but OG is feeling the heat on this one, because they interact with the public while MD Development doesn't.

If they get enough blowback, they'll look for another location (there's no shortage of them) without a developer blackmailing us for bailouts. And MD will maybe learn something.

jafs 3 years, 6 months ago

I'd rather that the reporting were more accurate, and thus put the heat on MD, where it belongs.

Kristine Bailey 3 years, 6 months ago

I must say, that corner has looked blighted for quite some time. A really long time. Because it is an eye sore to me, I say give them the Revitalization money. Revitalize that corner!

Bob Forer 3 years, 6 months ago

There's a lot of blight in town. Are you suggesting we start issuing a bundle of taxpayer checks simply to rid a few eyesores. Are you willing to write your own personal check to the "Make the Developers More Money Fund."

Shadysides 3 years, 6 months ago

I must say, that corner has looked blighted for quite some time. . Because I could care less what that corner looks like, but i don't want Rancho to be put out, go ahead and spend my money on it. Who needs schools anyway? BTW, my driveway looks terrible. The concrete is deteriorating badly, although it doesn't really bother me, I would hate for Rancho to drive by and see it, so perhaps the city should get it taken care of as well.

jafs 3 years, 6 months ago

If the property is blighted because developers bought it and let it sit and deteriorate, why should we reward them for doing that?

Scott Morgan 3 years, 6 months ago

If I were supreme leader of Lawrence this is my vision.

  1. Maintain and improve the unique shopping/entertainment aspects of Mass. Street. At a certain time perhaps just Thursday-Sat. allow open containers on the streets. Increase security to the point of having absolutely no safety complaints. Perhaps tax relief to the business people in this zone.

  2. Increase free access off I-70, give folks a reason to pull off and spend money in Lawrence. Same with the new I-59 coming soon. The toll road is killing this town, especially North Lawrence.

  3. Welcome with open arms (hands full of tax breaks) any developers for South Iowa and West 6th street. Lawrence is a much more fun little city to shop than Topeka or JO-co, give the folks some choices. (hum America the Beautiful while reading the next sentences) The next time I swerve just missing a texting teenager on Iowa I want to wreck in the parking lot of a Lowes. a giant Merc, Sears outlet store, or Red Lobster I want to be pulled from my SUV in the shadows of Popeyes Chicken or Trader Vic's. Is this asking too much my fellow Lawrencians?

  4. With benevolence begin to seek out a policy of fairness with an eye on public safety in developing new guidelines on what our responsibility truly is. I know for a fact our social welfare employees actually promote Lawrence and Douglas County as a respite.

Is this fair? Are we taking in other counties problems, then not having the services for our elderly and less fortunate? Are we unwittingly taking in legal issues which make us look bad, especially the national picture our city shows to future KU students.

  1. Finally, we come to North Lawrence. Sandrats indeed. A city of nearly 100 K and one really functional bridge to the North? If I were a sandrat I'd bite you.
    Part of the give and take in tax breaks could involve helping develop our sister to the North. We need to make every effort to make Lawrence one city.

tbaker 3 years, 6 months ago

“I haven’t made up my mind on that yet,” Cromwell said, after Tuesday night’s meeting at City Hall. “I don’t think that it’s an easy decision. We have to make sure that we’re using our tools wisely. We are talking about the public’s money.”

Public's money? Really? Where did the "public" get this money? That would be from the business owner who would pay the taxes. Mr. Cromwell would do well to remember this. He is another example of a greedy politician who feels entitled to someone else's property. He should focus on growing the economy and bringing jobs to the many unemployed folks in the city.

scaramouchepart2 3 years, 6 months ago

Tbaker The public money Mayor Comwell is refering to is the property tax and other monies citizens pay in town every citizen whether they can truly afford it to give tax breaks to, in this case, a developer who bought on speculation and a wealthy food chain a big tax break they can afford. Best said - MD wants to take their bet back after seeing the results.

tbaker 3 years, 6 months ago

Scaramouchepart2: I have a problem with the Mayors tone. In this context, he is speaking about (tax) money that will not be collected from OG if the incentive deal is approved. I object to his (and many other politicians) characterization of the the money. Saying "public's" money is the same as saying it belongs to the government. This is wrong becuase government does not create wealth, nor is it entitled to any. The money the government receives in taxes is rightfully "paid" to government such that law and ordinance call for. To hear this characterization is to hear a politician who believes the money in question is to be rightfully "taken" by government as if it belonged to them in the first place. Politicans tlak about our money like this all the time. People have grown acustomed to the lie they hear when politicans say a tax cut is going to "cost" the government money. Before something can cost you anything, you have to own the money to begin with. Money we earn and pay in taxes with is not the government's money, it is ours. We worked for it. We earned it. I would appreciate hearing politicans acknowledge that when they speak about something that does not belong to them.

Bob_Keeshan 3 years, 6 months ago

There are some interesting examples in this article, but what about the Longhorn Steakhouse and On the Border at the corner of 31st and Iowa?

Were they built with tax incentives?

What about the center with Five Guys, or the one with McAlister's Deli? Any tax incentives involved there?

Seems like those are more "apples to apples" comparisons.

jnixon 3 years, 6 months ago

To the folks from Olive Garden, I have long awaited your arrival. Hope you decide to build where there has been an unattractive retail corner for years - super location. However, if the other restaurants were not given the incentives that you requested, you shouldn't either. I think you will be profitable as are the other eateries on South Iowa. Maybe the wait for a table won't be as long with another place to dine. And to the people of Lowes...I am still waiting...

Fred Mertz 3 years, 6 months ago

Perhaps people might be more open to the idea if real numbers were produced.

What is the actual market lease rate for similar property? What is the rate that the developer will charge OG with the tax rebate? How much will the developer make each year in profit with the tax rebate? How much would they make without the tax rebate? How many people will OG employee and how much will they pay in taxes? Will what they pay in taxes offset what the city gives up in taxes?

If the deal results in a net loss to the city then why should we support it? If the developer can make a profit (just not as big) without the tax rebate then why should we support it?

scaramouchepart2 3 years, 6 months ago

According to the Neighborhood Revitalization Act this corner is not allowed the tax break. They are not in one of the designated areas of town for the NRA. The Kansas NRA and federal by the way, state that these breaks are allowed in large areas that have been designated by the governing body as the whole area is deteriorating and the tax breaks are used to incentivize property clean up. Which is the case here, but to help people who cannot afford to do so on their own and only those area are allowed for this Act and the city is NOT allowed to designate the whole city and the city has a map set which includes downtown (so Mr. Treanor was allowed), Oread, East Lawrence, North Lawrence, Pinckney and Brook Creek.

naturalist 3 years, 6 months ago

Agree with Bob. Tax incentives would be a misuse in this situation. Save them for unique projects, not for chain restaurants.

Bob Forer 3 years, 6 months ago

A lot of cold hearted bastards in this forum. The developer invested his hard earned bucks hoping to make a killing in a booming real estate market and then, bam, his big brothers of Wall Street destroyed all the fun by getting a little too greedy with sub-prime mortgages, effectively bringing our economy to a standstill. Now he can't take his wife and kids to the Cannes Film Festival this summer. His children are disappointingly devastated. The horrors. Think of the kids next time you open your big mouth opposing a most reasonable request to Save the Children.

tolawdjk 3 years, 6 months ago

Okay, vacant land prices have been dropping all morning, which means that everybody is waiting for it to hit rock bottom, so they can buy low. Which means that the people who own the vacant land are saying, "Hey, we're losing all our damn money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my wife ain't gonna f... my wife ain't gonna make love to me if I got no money!" So they're panicking right now, they're screaming "SELL! SELL!" to get out before the price keeps dropping. They're panicking out there right now, I can feel it.

Bob Forer 3 years, 6 months ago

Ah, a line from Trading Places. Good flick. ,

MarcoPogo 3 years, 6 months ago

I would be all for the tax break if it was for a Showbiz Pizza Place.

Kyle Chandler 3 years, 6 months ago

Or if BASIL LEAF CAFE (locally owned and operated) could be 'breaked' in there....they need a real place with SEATING!! GRRRR

Beth Ennis 3 years, 6 months ago

I am not in favor of a bailout for the developer. He bought the property right before the bottom fell out and wants to sell for a profit. He should sell it for it's current value and take the loss out on his tax returns. Don't ask the citizens of lawrence to pay for your bad timing in buying that property. That is all part of business. Sorry about that. Let's get real here folks.

CountyResident 3 years, 6 months ago

The article says Olive Garden claims that the restaurant would generate $5 miillon in annual sales. I question that. To have annual sales of $5,000,000 they would need to serve 548 customers everyday of the year, including Chrisrtmas, with an average meal cost of $25. Seems to me they just pulled a number out of the air.

sklop 3 years, 6 months ago

I see where you are getting your numbers, but I question your logic. I would guess their average ticket is about $40-$50 so that means even if they are closed on Christmas they would need to be serving in the upper 200s of groups per day to do $5 million in sales. Totally plausible.

CountyResident 3 years, 6 months ago

I must be cheap. I rarely spent $40-$50 for dinner. I looked at their menu and most of their dinner entrees are under $15. The most expensive item I saw was $18.95 Most of their lunch items are less than $10. You can have their unlimited soup, salad & breadsticks for $6.95. I just don't think this is the type of restaurant that you would generally spend $40-$50 for dinner. When you look at average, which includes lunch, I think my number of $25 is probably on the high side.

Scott Morgan 3 years, 6 months ago

you forgot the bar, catering, special parties, and KU game days.

pizzapete 3 years, 6 months ago

In these hard economic times tax breaks like this make a lot of sense. Remember, even the very weathy are waiting for a discount before they buy their next Ferrari. Think about it, after paying for fuel for your private jet, a chauffeur for your stretch Hummer, and someone to feed your pet zebras, it's easy to see where a guy wouldn't have any extra money to rehab a commercial property.

sklop 3 years, 6 months ago

I really don't fault Olive Garden for seeking a break like this, but it would be stupid to grant it to them and set that precedent. They will build it anyway if they really think they will do those sales in that location. They should have to pay taxes just like everyone else. All for competition in a fair market, but the hurt that will be put on Paissano's especially and probably Applebee's as well as others in the area should not be downplayed. The city should use the increased tax revenue they collect to make improvements on "the bud" just around the corner. Maybe provide somewhere for pedestrians to walk besides the middle of the road on Ridge Ct, Ousdahl, and Cedarwood.

jafs 3 years, 6 months ago

It's not OG that seeks this tax break, it's MD development.

According to prior reporting, OG will pay market rent prices to MD if the break is allowed, thus OG will not get any break. The break will be for the owner of the property, MD development.

gl0ck0wn3r 3 years, 6 months ago

I hope Olive Garden doesn't come. I've enjoyed that empty lot for years and Lawrence certainly doesn't need more jobs or tax income.

Joe Hyde 3 years, 6 months ago

Instead of an Olive Garden for that location, how about a new funeral home? Drivers on W. 27th who catch a red light at Iowa St. can die of old age waiting for that light to turn green.

Armored_One 3 years, 6 months ago

I have an oddball question that might be interesting to watch get kicked around on here.

Longhorn, On the Border, McAllisters, Applebee's, and so on and so forth, were built well before the economic crisis we, as a country, find ourselves in.

The question: Is it fair to compare businesses that were built when the economy was booming to a business that will be built during the downside of that boom?

I am sure, somewhere, there is a ranting thread about how developers in this town raked in the cash while the economy was thriving, but I can't remember reading one. I have, however, recently read about bailouts for this company and that company.

I think the solution should be fairly obvious, in all honesty. Let Olive Garden and MD hash out the price. Once that is set in stone, pun not intended, THEN the city can talk with Olive Garden about what they want compared to what the city is willing to offer.

Too many fingers in the pie all at once.

Bob_Keeshan 3 years, 6 months ago

Is Famous Dave's getting tax incentives?

Armored_One 3 years, 6 months ago

Ya know, I'm not sure about that one. All I remember reading was that they were moving into the Herford House spot, but that is about it...

beatrice 3 years, 6 months ago

Olive Garden is owned by the parent company Darden Restaurants, a company with assets of more than $5 billion. The CEO of Darden is Clarence Otis. In 2010, the compensation package given to Otis was more than $7.7 million, a rise of 15% over the previous year.

If a company can afford to pay the boss $7.7 million a year, do you really think they need citizens' tax money to open one more restaurant?

The problem isn't that Otis makes a lot of money. The problem is when those who clearly do not need it try to take money from the taxpayers for their personal gain. The time has come to say no to such nonsense. Enough is enough.

beatrice 3 years, 6 months ago

So you don't care for the way I phrased it. So what.

Are you in favor of giving Darden a tax break to open a restaurant that isn't extended to all other businesses? Do you think it advisable to give tax breaks to companies that clearly can afford to operate and profit without being given tax breaks?

By the way, I love the "crazy stuff" talk. That kind of comeback always makes your arguments so strong.

Armored_One 3 years, 6 months ago

Out of curiosity, beatrice, are you suggesting that the tax break be retroactive?

somebodynew 3 years, 6 months ago

Qestions for LJW:

Why do the headlines keep saying Olive Garden, when it is actually MD Investments that will make the money off of this. If what MD is saying that they will charge OG "market rate", OG isn't getting the money (other than they would be charged over the market rate w/o this deal - and that just sounds stupid to do).

WHO is MD Investments (or whatever there name is)???? I guess it really doesn't matter as I don't believe we should bail them out for a bad investiment, but it would be nice to know the names of the players here. Is this some of the same crowd we are accustomed to hearing from hiding behind a new corporate name; are this out-of towners who have never asked for any other breaks here; is Mike Amyx part of this group (hence the recusing of himself) ??? Yes, I am skeptically (even tho I like Mike) that just because his parents once owned that land and sold it, that alone creates a conflict. Especially since he and Schumm can vote on every issue downtown, when they are downtown business owners. Oh well, that is another topic.

I feel these are legitimate questions we should be aware of instead of all the hype over OG and whether it is a good restaurant or not.

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