How deeply Lawrence wants to wade into the world of financial incentives for new development projects may get a bit clearer Thursday.
A key city advisory board will debate two controversial incentive requests: one for a new Olive Garden restaurant on South Iowa Street and another for a multistory apartment, office and retail building in downtown.
“The main thing we have to figure out is what will be the ultimate financial benefit to the city,” said Mayor Aron Cromwell, who chairs the city’s Public Incentives Review Committee, which will meet at 4 p.m. at City Hall to craft recommendations to the City Commission.
City staff members are recommending about $200,000 worth of incentives for the downtown development but are making no recommendation on whether the city should provide property tax rebates for a proposed Olive Garden at 27th and Iowa streets.
Here’s a look at the two projects:
Ninth and New Hampshire
A development group led by Lawrence businessman Doug Compton has started construction on an $11 million, seven-story apartment, office and retail building at the southwest corner of Ninth and New Hampshire streets.
As part of the project, the development group is seeking $280,000 in property tax revenues from the city to help pay for public infrastructure — such as sidewalks, street lights and water meters — that are part of the project.
The group contends the project is entitled to help with public infrastructure costs because the property is part of a Tax Increment Financing district that was created in 2000. The district was designed to spur a major redevelopment of the 900 block of New Hampshire. Ultimately a new Lawrence Arts Center and a public parking garage were built, but many of the private buildings that were envisioned for the block were not constructed.
But the TIF district did spell out that development in the block would be eligible to receive public assistance on infrastructure costs.
“What I hope people understand is that we’re not asking for a new incentive,” said Bill Fleming, a Lawrence attorney who represents the development group. “This was an incentive that was created back in 2000 as part of a district that was meant to encourage people to develop in downtown.”
The city’s staff is recommending the project receive $20,000 per year for 10 years rather than a $280,000 upfront payment. City staff members noted that the TIF district has not worked out as originally planned. The original plan was for tax revenues from new private development in the block to largely pay for the public parking garage. Instead, general tax dollars have largely been making the approximately $800,000 per year payment on the garage.
“I think one of the questions we’ve tried to deal with is whether it makes sense to reimburse the full amount on something that was anticipated and contracted to have been done about 10 years ago,” said Corey Mohn, the city’s economic development planner.
Fleming, though, said he doesn’t think the city should hold that against the current request, since Compton’s group was not the original developer of the district.
The development group also has asked for parking considerations in the adjacent public parking garage. Originally, the group wanted 65 reserved spaces in the garage at a reduced rate, but it has now dropped its request for reserved spaces. It now plans to purchase parking passes — the same kind the general public can buy — to use the garage. The group would like a discount, but staff member are recommending that the passes be sold at the full rate of about $195 per year.
27th and Iowa
Developers of a proposed project that would include an Olive Garden and two other unidentified tenants are seeking about $600,000 in property tax rebates over the next 10 years. An analysis by the city found the project would produce $1.48 in new city benefits for every $1 in city costs. But that analysis was dependent upon an assumption that 40 percent of all the sales from the Olive Garden would not happen otherwise in Lawrence.
Cromwell said he’s not convinced that number is accurate.
“I have real question about how you get to that number, how many people that would be and where they all would be coming from,” Cromwell said. “My guess is that the number probably is lower than that.”
City staff members did run the analysis assuming fewer of the sales would be entirely new to the city. Assuming that 20 percent of the sales would be new to Lawrence produced $1.27 cents in benefit for every $1 in costs.
The project, however, has drawn stiff opposition from a group of local restaurant owners, who argue the incentive will create an uneven playing field in the industry. Questions also have emerged about whether the incentive largely would help cover losses by a Kansas City area-development group that bought the vacant property at the height of the real estate market.
A Lawrence attorney representing the development group declined to comment prior to the review committee meeting.
PIRC is expected to make recommendations on both projects on Thursday, but ultimately the City Commission will decide the incentive issues at a future meeting.