A proposed multistory hotel and apartment building at Ninth and New Hampshire streets will need several financial incentives to become reality, according to new information provided by the developers.
The development group, led by Lawrence businessmen Doug Compton and Mike Treanor, is seeking a special 1 percent sales tax on purchases made inside the building and the use of tax increment financing to help pay for a below-ground parking garage and other infrastructure items.
“This is just a recognition that it is very, very difficult and expensive to provide off-street parking in downtown,” said Bill Fleming, an attorney for Treanor Architects and the development group.
The project proposes to build two levels of below-ground parking that would provide more than 100 parking spaces for hotel guests and residents of the apartments. The parking lot would not be open to the general public.
But this is not the first time developers have sought financial assistance to provide private parking. The package of incentives being asked for by Compton and Treanor is nearly identical to the list of incentives approved for The Oread hotel on the north edge of Kansas University’s main campus.
City commissioners already were scheduled to discuss the hotel/apartment project at their March 27 meeting. Commissioners are set to hear an appeal of a rejection of the project by the city’s Historic Resources Commission. But Mayor Aron Cromwell said he wants to hear both the HRC issue and the financial issues at the same time. He said that may force the city to delay discussion on the project into April.
“I think it will be nice to have the whole picture presented to us at one time,” Cromwell said.
Developers specifically are asking for three pieces of assistance:
• A transportation development district that would add a 1 percent sales tax to sales made inside the building. The special tax would apply to hotel rooms, restaurant sales and other retailers in the building. The special taxing district would not extend to any other buildings or properties in downtown.
• Creation of a new Tax Increment Financing district. TIFs serve as a type of property and sales tax rebate program to help pay for infrastructure costs. A TIF basically takes property and sales taxes that are the result of a new development and allows those taxes to be used to reimburse the developer for expenses related to certain infrastructure costs.
The site of the proposed building, the southeast corner of Ninth and New Hampshire streets, already is part of a TIF district. Proceeds from the existing TIF district are being used to partially pay city bonds issued for the public parking garage that exists in the 900 block of New Hampshire Street. But developers are asking to pull their property out of the existing TIF district and place it into a new district. The new district would last for the next 11 to 12 years, while the current district is set to expire after seven years.
Whether the new district would continue to contribute to paying off the bonds for the existing city-owned parking garage is still a point of negotiation, City Manager David Corliss said.
• The use of industrial revenue bonds issued by the city. The bonds would allow the project to receive a lower interest rate than through a traditional commercial loan. The bonds have the name of the city on them, but the city has no legal obligation to pay off the bonds in event of a default.
The development group is proposing to build two levels of below-ground parking even though the city’s zoning code does not require downtown development to provide off-street parking.
Fleming said the building’s main tenant, a Marriott extended-stay hotel, will not move forward with the project unless private off-street parking is provided.
Corliss said the city will have a third-party consultant develop a report that analyzes the project and determine whether the financial incentives are critical to making the project feasible.
The proposed building already has drawn considerable opposition from several neighbors and Historic Resources commissioners who say it will be too tall to fit in with the historic neighborhood east of the site. The building is proposed to be six stories in some locations and three stories as it gets closer to the existing neighborhood.