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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.