News and notes from around town:
• New details are starting to emerge on a proposal to build a regional recreation complex in northwest Lawrence, and the idea isn’t getting any cheaper. But a new memo from City Hall still suggests the community is in line to get a good deal.
Here are the key points as I understand them:
— Local builder Thomas Fritzel and his company would build a 165,000-square-foot indoor recreation center and sell it back to the city on a lease-purchase agreement. The terms of that agreement would be: the city would pay a $100,000 per month lease payment for the next 20 years. If your calculator starts to smoke at numbers of such size, that’s $1.2 million per year or $24 million for the 20-year period. At the end of the 20-year period, the city would own the facility. It will own the ground from the very beginning.
— Perhaps at this point, you are recalling that city officials once indicated the city’s share of the project would be closer to the $13 million to $16 million range. Well, that is still true, but it gets complicated. (I’ve noticed that tends to happen when you are trying to explain how $24 million and $16 million are one in the same.) Here’s the explanation: The city would pay $1.2 million per year to Fritzel. That $1.2 million is about equal to the amount of annual debt payments the city is making for several other projects that recently have been or soon will be paid off.
The key point, the city argues, is it will be using the same $1.2 million per year that it always has had its eyes on for a future recreation center. Previously, the city had assumed it would have to go out and sell bonds to finance a new recreation center. With $1.2 million per year at 20 years, that is $24 million but you won’t get a $24 million bond for that. Instead, the city is now estimating, you would get about a $16.5 million bond. The rest of the $24 million would go to pay interest on the bond.
Under the current proposal, the city wouldn’t have to issue a bond. Instead, it would make monthly payments to Fritzel.
— A special sales tax district also has come into play on this project. The city is proposing that a special 1-percent transportation development tax be charged on all purchases made at the recreation center and the approximately 100 acres of commercial property that is envisioned to surround the center. The special 1-percent tax would be used to pay for the costs of the roads to serve the recreation center and the commercial development. A cost estimate for the road infrastructure hasn’t yet been finalized. As a note, the $24 million doesn’t include any infrastructure costs, such as roads, sewers or water lines.
— More formal opposition from neighbors also has entered the equation. I don’t have all the details, but the city has acknowledged that neighbors have filed a formal petition to protest the proposed commercial zoning for the property. The protest petition means the rezoning would have to receive four votes instead of three at the City Commission in order to be approved. Based on my reading of the tea leaves, getting four votes won’t be a problem. Financial matters, not zoning matters, will be the most likely culprit to derail this deal.
— City officials want more details about what will be included in the design of this recreation center building. In general, the $24 million cost includes a 165,000-square-foot building and 800 parking spaces. It also is expected to include multiple gyms, a fitness area, a wellness center, a indoor turf field, a walking track and other features. The city is proposing to hire Lawrence-based GouldEvans architects to review the plans, modify them to meet the city’s standards, and come up with an independent estimate of how much the building will cost to construct.
That will be a key number. My understanding is, the city is being told the building will cost about $24 million to construct, which would mean that Fritzel essentially would not make any money on the construction of the building. Or another way to look at it is Fritzel would be financing the construction of this project interest-free for the city. Again, my understanding is that Fritzel has presented this as his donation to the city in this public-private partnership. It would be a significant donation, but the city wants to confirm all the numbers behind it.
— All indications are that Kansas University continues to be very interested in building a track facility and soccer field at the site. Fritzel, it appears, also would build those facilities. Whether he would finance them on such favorable terms, I do not know.
— There is one other cost that hasn’t been talked much about with this project yet. How much would it cost the city to operate this facility? At this point, the city doesn’t have an estimate. But it will be significant. I haven’t confirmed this, but a city official told me that at 165,000 square feet this new building would be larger than all the other indoor recreation spaces the city owns combined.
I think there are other questions out there with this project, too. I think there is reason to question whether the other private partners in this project — Duane and Steve Schwada, who have proposed to donate 50 acres for the facility — are on board with Fritzel's plan. I’m not sure of the potential objections, but if their objections are strong enough, the deal could collapse.
Another question is the role Bill Self’s Assists Foundation in this. At one point, the foundation seemed very interested in donating $1 million to a major recreation center, and perhaps could help raise another $1 million or $2 million in private funds. I still think the foundation is interested in doing so. But where does that money fit into the equation? Does it go to the city, the builder, or does it pay for some expenses not yet identified?
• I spent a couple of days away from the office last week boating on beautiful Melvern Lake, which caused me to neglect passing along the weekly land transfers from the Douglas County Register of Deeds. But fear not, click here to get two weeks worth of land transfers.
Worth noting is it appears prominent real estate investor and frequent GOP political commentator Lawrence Kadish apparently has bought the property that houses the Kmart Distribution Center. According to the register of deeds listing, Kadish purchased both 2400 and 2424 Kresge Road from a trust led by Micheal O’Neill and Gayle B. Wilhelm. It appears Kadish owns the real estate that houses several Kmart stores across the country as well.
On a slightly smaller scale, it also appears some industrial property near the railroad tracks in East Lawrence has changed hands. Rockchalk Real Estate LLC — which lists Lawrence resident Carol March as its resident agent — has purchased the property at 1010 E. Ninth Street. I’m not sure what is housed there, but it is near the property that Star Signs occupies at the end of Ninth Street. Rockchalk purchased the property from Tyler N. Thone.
Also perhaps worth noting, to some, is it appears Kansas Attorney General Derek Schmidt and his family have purchased a new home in Lawrence. I’m not sure if he already lived in Lawrence or is new to the community. It would be interesting sometime to see how many statewide elected officials and cabinet members who serve in Topeka choose to live in Lawrence.