Archive for Wednesday, June 29, 2011

Town Talk: Compton project at Ninth and N.H. recommended for incentives; Olive Garden project less clear; longtime insurer closes Lawrence office

June 29, 2011


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News and notes from around town:

Maybe fireworks will come early this week at Lawrence City Hall. Two economic development projects that have riled a few people will be debated on Thursday. The city’s Public Incentives Review Committee will consider making recommendations on financial incentives for a multi-story apartment, retail and office project at Ninth and New Hampshire. It also will consider creating a special property tax district for an Olive Garden restaurant at 27th and Iowa streets.

First, the downtown project. A group led by Lawrence businessman Doug Compton asked the city in November to consider providing $280,000 in funding for public infrastructure related to a seven-story, multi-use building that's now under construction at Ninth and New Hampshire. The group also was seeking 65 reserved parking spaces in the adjacent city parking garage, and it wanted access to those spaces at a reduced rate. The bottomline now is that city staff members are recommending the project receive some incentives, but not all the group has requested. After it became clear there were concerns, the development group dropped its request to have reserved spaces in the garage. It now plans to just purchase parking passes — the same kind the general public can buy — to use the garage. The group would like a discount, but staff members are recommending that the passes be sold at the full rate of about $195 per year.

The issue of providing $280,000 to help pay for public infrastructure seems to be a stickier subject. City staff members are recommending that the project receive $20,000 per year for the next 10 years. The development group had hoped for $280,000 largely upfront. At issue is what message the city previously has sent regarding available incentives for that block, and what message it will be sending if it doesn’t offer any incentives now. In 2000, the city commission created a Tax Increment Financing District to aid in the redevelopment of the 900 block of New Hampshire street. A new Lawrence Arts Center and a public parking garage were built. One private building also was constructed (the building that houses Pepper Jack Grill) but other private buildings did not follow because of a downturn in the economy. But the TIF district remains and still has another 10 years before it expires.

The TIF district spelled out that new property tax revenue created by the development could be used to pay for infrastructure improvements — everything from the parking garage to sidewalks to storm sewers. While the parking garage is already built, the multi-story building will require new sidewalks, storm sewers, water lines and sewer lines. That’s what the $280,000 would go to pay for.

But the city has pointed out that the TIF agreement hasn’t worked out as originally planned. All the property in the block was supposed to be developed more than five years ago. All the new tax dollars from that development were supposed to be used to make the nearly $800,000 a year bond payment on the garage. That hasn’t happened. Instead, general city taxes have been used to make that payment. Members of the development group, though, say that isn’t their fault. Compton’s group wasn’t the one who set up the original TIF district. But they say their project can help with the financial situation that exists today. Even with $280,000 worth of incentives, the city’s own analysis has found that the development will provide at least $1.25 in new city taxes for every $1 worth of new expenses it will create for the city. All told, the project is expected to pay about $7 million in taxes over the next 10 years.

To top it off, the development group is arguing that if the city doesn’t provide the incentive it will just be hurting itself by making it more difficult to develop the vacant lot just across the street from this property.

“We believe the city’s response to the developer’s request will establish whether the city is serious about supporting development in downtown Lawrence,” a representative of the group wrote to city staff in a letter.

The Olive Garden project is even dicier in a way. The city’s analysis found that the Olive Garden project would return $1.48 in benefits for every $1 in city costs. That’s better than the Compton project that received at least a somewhat positive recommendation from city staff. City staff, however, is not recommending the Olive Garden project. They’re also not asking commissioners to deny it. Instead, they’ve taken no position on it. Probably smart. The political winds are swirling on this one. Local restaurant owners have come out strongly against this project. City Commissioner Bob Schumm, who also is a restaurant owner, has spoken out against it. City Commissioner Mike Amyx has recused himself because his parents owned land that is now part of the deal. Plus, there are some philosophical issues here. Will the property develop without an incentive? Is the incentive just to bail out a developer who overpaid for the ground? Does the city want to offer incentives to attract a national chain?

Those question are yet to be answered. But the city does have some new data on the project. The Kansas City area development group that owns the property is looking to receive a property tax rebate as part of the Neighborhood Revitalization Act. We now know that the project wants a 95 percent tax rebate for the first four years and that the amount gradually would fall to 20 percent by year 10. After year 10, the project would not receive a rebate. All told, the project would receive about $600,000 in rebates over a 10-year period. The key part of the analysis is how much new spending the Olive Garden — and two as of yet unidentified tenants that would be in an adjacent building — would create for the city. The city’s analysis estimates that 40 percent of the sales at the restaurant would be sales that would not happen otherwise in Lawrence. That is what created the $1.48 in benefits for every $1 in cost. But, the city’s economic development planner told me that estimating how many new sales the project will create is tricky business. So, he also did the analysis assuming a much lower percentage. Even if only 20 percent of the sales from the project are new to Lawrence, the development still scores high. Under that scenario it would create $1.27 in revenue for every $1 in costs.

So, it will be interesting to see how the Public Incentives Review Committee views both of these requests. It will meet at 4 p.m. Thursday at City Hall. But remember, this is just Round 1. The PIRC will make its recommendations, but ultimately the City Commission will decide.

Following up on a tip from a Town Talk reader, indeed Downtown Lawrence is losing a significant office tenant. Willis, the insurance company that formerly was Charlton Manley, has closed its Lawrence office at 211 E. Eighth Street. The company has moved its Lawrence staff to an existing office in Overland Park. A total of 12 employees made the move. There had been 14 employees at the office, but two positions were lost as part of the reorganization. Increased efficiencies led to the reorganization, but a company spokeswoman said the insurer still would compete for business in Lawrence.

“Lawrence is still a very important market for us, and we are going to continue to serve the market,” said Coleen McCarthy, director of communication for Willis North America.

No word yet on whether a new tenant has been found for the company’s downtown offices.


Brian Hall 6 years, 12 months ago

"the development group is arguing that if the city doesn’t provide the incentive it will just be hurting itself by making it more difficult to develop the vacant lot just across the street"

Kind of sounds like a threat. Is Compton going to scare away possible developers by dressing up in Frankenstein and mummy costumes, only to be stopped by a group of meddling kids and a talking dog?

Brock Masters 6 years, 12 months ago

I don't understand how 40% of the sales at Olive Garden will come from sales that would not otherwise occur in Lawrence.

The only two ways I see this happening is that people who reside in Lawrence who do not go out to eat will suddenly decide to eat at Olive Garden or people outside of Lawrence will come to Lawrence to eat only because Olive Garden is now there.

I just don't see anyone (or at least the number cited by the report) who never comes to Lawrence to eat suddenly deciding that eating at Olive Garden is a reason to start.

Maybe I am wrong, but it just doesn't ring true to me.

RoeDapple 6 years, 12 months ago

I know of quite a few people who go to Topeka to shop due to lower prices on gas, groceries, lower sales tax rate. Just so happens there is an Olive Garden near a major shopping center in Topeka.

If you build it they will come . . .

Brock Masters 6 years, 12 months ago

What is your point? Lawrence has a higher sales tax rate than KC and Topeka. Topeka has an OG already so why would someone who would not ordinarily travel to Lawrence to eat decide that they will come to Lawrence simply because there is an OG?

Remember the point is not if people will eat at OG, but if people who do not eat at any of Lawrence's restaurants will come to OG. Will there be new business or just a shifting of existing business is the question.

So try again and explain to me why someone who does not patrongage Lawrence today will suddenly be moved to do so?

ModerateOne 6 years, 12 months ago

Approximately twice a year I drive to Topeka for the specific purpose of taking my family to Olive Garden.

Ewok79 6 years, 12 months ago

Oh come on!! Why would anybody drive to Topeka to go to Olive Garden?? When we've got delisious italian resturants in Lawrence

Catalano 6 years, 12 months ago

We also have people who can spell, too. Although not many frequent this board.

stuart 6 years, 12 months ago

I agree and if one does the math it would be 365 people a day (with a 15 dollar per person average) (according to OG) that would suddenly decide to eat out !

Vinny1 6 years, 12 months ago

Downtown development is good. Those empty lots look horrible. They've already backed down from their parking pass request, (which by the way, how is a downtown parking pass cheaper than a KU pass - garbage), and the city will make tons of money on the deal.

As for Olive Garden, of course other restaurant owners are against it....duh. Its competition. However it will also bring tons of money into the city, there is no reason not to do it.

Brock Masters 6 years, 12 months ago

Vinny, you're right it is competition, but it is not competition on a level playing field. Yeah, I know that the developer and not OG gets the tax rebate, but OG will benefit too. They will be able to lease the location that they have determined will be most profitable for them and they will be able to lease a building that would normally require a higher lease rate if not for the rebate. So OG does benefit and thus, the competition is not level or fair.

And what is the basis for your statement that it will bring tons of money into the city? New money or just a shifting of dollars?

chocolateplease 6 years, 12 months ago

It seems like they wouldn't have built already if they weren't expecting to be profitable; isn't this just naked greed to ask for additional handouts from the city now?

Also, when the city workers calculate the gain in revenue due to these developments, do they consider the possible lost revenue that occurs when other businesses can't compete this new revenue-generating source? I know it can't be predicted perfectly, but it seems reasonable that when enough new businesses succeed, there are naturally some that won't be able to survive the competition. So, the new generation of revenue will be off-set to some degree.

Bob_Keeshan 6 years, 12 months ago

I've heard the powerful attorney and City Hall unofficial lobbyist, Mr. Ben Dover, has been working hard on Compton's behalf.

Ben Dover always seems to get his way with the commissioners.

Richard Heckler 6 years, 12 months ago

The only thing that scares people away from the lot across the street is inflated market value.

These tax dollar hand outs for the Compton project should have been discussed long before an approval was handed down and during the entire process. Is this considered business as usual or is this a violation of sorts? There is something very wrong with this picture.

The Compton project occupying potentially 110 spaces will also make it difficult to sell the vacant lot.

The only people who can make Compton's unusual business approach a success are our elected officials. Once this precedent is in place how can city commissioners ever say no?

Seems like dangerous territory.... There is something very wrong with this picture.

pizzapete 6 years, 12 months ago

They're going to have to build a parking garage on that lot across the street to make up for this overbuild monstrosity that should have been required to have it's own parking.

boxers_or_briefs 6 years, 12 months ago

I wonder what type of plywood Compton will use on this building in a couple of years?

BruceWayne 6 years, 12 months ago

I think boxers was questioning what type of plywood will be used to board it up after it fails.

MarcoPogo 6 years, 12 months ago

On top of that, what it will cost the city to tear out the islands and redo the arrangement of that block just so cars can even pull into the parking lot? It's not like they're going to run our precious "out of town" fancy diners up Redbud Lane..

jafs 6 years, 12 months ago

An interesting part of this story is the fact that the TIF for the Arts Center, etc. hasn't worked out as planned.

I imagine many other such projections will not turn out as planned either, which is a good argument against subsidizing businesses based on those projections.

1southernjayhawk 6 years, 12 months ago

Jaf, excellent point. The City has no place in providing/supporting financing for either of these projects. They are private projects designed to compete in the private market to provide a return to the private investors. If the numbers don't work on their own without local government help, the projects do not need to be built. The public sector has nothing to gain from either of these projects-there are plenty of very nice places to live and to eat in Lawrence...all provided by private investors not receiving financial help from the City.

Mary Alexander 6 years, 12 months ago

I agree with both of you. City needs to stay out of this.

tonytman 6 years, 12 months ago

What about comptons failed 20 million doller project in Topeka it had city tax incentives and is next to the collage and is still empty

Belinda Rehmer 6 years, 12 months ago

How many others drive to KC or Topeka specifically to dine at Olive Garden? I LOVE Pasano's and I do eat there, however, I also drive to KC specifically to dine at Olive Garden.

pizzapete 6 years, 12 months ago

The city needs to raise the rates on these parking passes instead of increasing our property taxes when looking for new revenue. It costs me $100 a month to store my car over the winter, at $195 a year, maybe we should all be storing our cars at the parking garage?

irvan moore 6 years, 12 months ago

another development to attract upper income people to live in downtown Lawrence at taxpayer expense. the commissioners want the "library" parking garage because there isn't enough parking downtown but we are going to give up downtown parking for the Compton and Trainor projects. i don't remember how many spaces will be available for "library" parking but it would be interesting to know the net gain after deducting the spaces these projects will take.

Kontum1972 6 years, 12 months ago

how does Popeye feel about Olive's garden?

sr80 6 years, 12 months ago

Time to move the bus stop again, we don't want the rich to be offended by the view of the average person !

beatrice 6 years, 12 months ago

Olive Garden is part of a group of restaurants owned by a single company, Darden Restaurants. Darden has net assets of more than $1.6 billion. They pay their CEO more than $7 million a year.

Darden clearly does not need money from Lawrence taxpayers in order to thrive. If they believe there is a profit to be had by building a restaurant in Lawrence, they will build it. Taxpayers shouldn't build it for them.

cummingshawk 6 years, 12 months ago

Let's see, there is talk of increasing the property tax for current citizens and businesses. Why are they even considering spending money on PRIVATE business developments? Remember, Compton's request came after construction started, not as part of the original plan presented to the city. And the OG request shouldn't receive any assistance due to the investors having paid too much for the property and now their speculation has gone sour on them. Is the city going to start bailing out all speculators who have rolled the dice and lost?

vuduchyld 6 years, 12 months ago

And BOOM! Topeka lands yet another REAL project....a $250 million dollar commitment from M&M/Mars to build a plant there that will open up with 200 jobs and hopes to grow to 425.

More primary employment for Topeka. I sure wouldn't want to live there, but they are doing something right when it comes to development.

Clara Westphal 6 years, 12 months ago

Let Compton pay for his projects. I am tired of eating hotdogs and beans because my taxes keep going up to pay for all of this.

Catalano 6 years, 12 months ago

Hey Chad...why were members of the Carpenters Union (I think it was that union) picketing First Management a couple of weeks ago? I never saw anything about it in the paper. I think they're done, now, but would like to know why union members were picketing Compton. Can you look into this, please?

stuart 6 years, 12 months ago

Maybe Lawrence could put a toll booth on every exit out of town.......

Kelly Johnson 6 years, 12 months ago

I will spend money to eat at Olive Garden that I would not have spent locally otherwise. When we lived in between Lawrence and Topeka, but still in DG county, there were plenty of times we would have driven to Lawrence instead of Topeka to eat if we'd had an OG in Lawrence back then. So, yes, there are people who will spend money in Lawrence due to OG that wouldn't spend it here otherwise.

Bob Forer 6 years, 11 months ago

"Look around. the main complainers are schumm and his buddies"

Absolute unadulterated nonsense. Are you suggesting that roughly 95 per cent of the folks who have posted on this thread against OG are either bob schyumm or his buddies.

Thats crazy, oletimer. Sounds like you are ready for a nursing home.

stuart 6 years, 11 months ago

Big difference: Walmart did not ask for money from Lawrence.

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