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Archive for Thursday, March 8, 2012

Developers of hotel at 900 N.H. seeking financial incentives from city

March 8, 2012

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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.

Comments

ksjayhawk74 2 years, 9 months ago

Oh the irony...

Compton's 9th & New Hampshire apartment building gets to attach itself to the public parking garage, for free and he gets to pay just a fraction of the tax rate while he does it.

Now he wants to build another place across the street and add a special tax on everything that happens there to pay for his own private parking garage... while paying just a faction of the tax rate.

So paying taxes to the city doesn't work for Compton, but paying taxes to Compton is A-OK.

CLARKKENT 2 years, 9 months ago

PLEASE, SOMEBODY TELL COMPTON AND TREANOR NOOOOOOO.

true_patriot 2 years, 9 months ago

Here come the wealthy investors looking for more taxpayer handouts. The city caved into their prior demands and so like spoiled children here they come again. They will keep doing this until someone has the backbone to put a moratorium on welfare for the rich.

Children in Douglas County and in Lawrence go to bed hungry at night, recently homeless families vie for shelter space, long lines form at dental clinics, people go into bankruptcy due to medical bills. We need to address the basic health of our town before we give out any more handouts to the wealthy.

I'm not sure how we are already at the bilking-the-taxpayer stage when the discussion should be whether they get to develop anything there at all. They destroyed the community green space that was used for the summer movie night series - this remaining postage stamp of parking where they propose a project that will tower over East Lawrence and shake the historic mid-1800's buildings to their core a few feet across the alley - this last dab of space should be renovated to be used for park area and live shows year round, and planned to function as the summer outdoor family movie space as well - an event that was spectacularly successful in prior years, drawing together families, college students, townies and those of all ages to watch old movies together outdoors and truly bond as a community should.

mysterytrain 2 years, 9 months ago

You have got to be kidding. Really? I hope our commission doesn't fall this money grubber yet again.

Patti Hadl 2 years, 9 months ago

If Doug Compton can't afford all the expenses necessary to complete the project, then why do my taxes help him cover the costs? Frankly, Doug Compton has never helped me pay for things I can't afford so I see no reason to help him out. Somehow, some way these incentives have to come to a halt.

Bob Forer 2 years, 9 months ago

I have a sneaking suspicion that a majority of the City Commission have already made up their mind and will override the denial of the project by Historic Resources Commission.

just_another_bozo_on_this_bus 2 years, 9 months ago

The other side of that equation is how much have they run up in city/county expenditures. Wanna take a stab at that?

just_another_bozo_on_this_bus 2 years, 9 months ago

"That is why I question the rabid hatred for the developers. It seems to be more jealousy driven than fact based."

Seems to me that your real goal is to attack those who question the tax breaks rather than discuss the merits of those tax breaks.

just_another_bozo_on_this_bus 2 years, 9 months ago

"It doesn't matter whether people like Compton or hate him; "

Then why did your previous post feature so prominently the contention that any opposition to these tax breaks can only stem from "hatred" and "jealousy?"

true_patriot 2 years, 9 months ago

That's always the argument used to justify welfare for rich investors but on balance this has generally been a losing deal for Lawrence. The pattern has often been that the investors exploit the taxpayer handout as long as it's feasible and the abandon the project long before the city can break even (much less see a real return on investment) from the years of paying into the tax base that is supposed to happen after the TIF's and tax exemptions expire.

Further, at its core, your comment suggests that the wealthiest few are entitled to hand-outs from the city coffers to lubricate the generation of even greater wealth simply because they are more wealthy than the average citizen who actually work to just get by, rather than marrying into money and using it to steal more money from average workers ... A rather cynical attitude toward democracy and American mid-size city potential in my view.

JustNoticed 2 years, 9 months ago

"jealousy" "hatred". How about not liking being lied to? How about a neighborhood group "working with" the developer only to find out too late what a liar he is?

pizzapete 2 years, 9 months ago

"This is just a recognition that it is very, very difficult and expensive to provide off-street parking in downtown,” said Bill Fleming, and that's why we were thrilled to take over the garage Lawrence taxpayers provided for us for our last project. Instead of asking the city to build us another garage for this project all we're asking for this time is the money to build it ourselves. That way we won't have to pay the city any rent as we'll own this garage outright.

All we want is for the Lawrence taxpayers to show some compassion for those in need. If we have to pay for parking ourselves, I don't see how we're going to be able to afford a new private jet or be able feed our zebras. Think of the zebras, they have to eat, too.

Fred Mertz 2 years, 9 months ago

Lawrence should learn from Wichita and stop this corporate welfare. If it is worth building it is worth building without my dollar supporting it.

audvisartist 2 years, 9 months ago

The headline should be, "Doug Compton Wants Mo' Money"

Sigmund 2 years, 9 months ago

"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."

He who picks and pays for the consultant will get the the report and recommendation they want.

true_patriot 2 years, 9 months ago

And if not, they will then ignore the study they paid outrageous money for, like they did with the impact fee study several years ago. It found that Lenexa was controlling growth and funding improvements to the sewer and other infrastructure to deal with the heavy load imposed by new development and that it had no negative impact on their growth or tax returns and in fact was a recommended solution for Lawrence.

The powers that be were shocked to get the expensive study that recommended the opposite of what they wanted (no impact fees on developers) so they promptly ignored and decided not to impose impact fees.

Richard Heckler 2 years, 9 months ago

What makes anybody think local developers pay personal property taxes on time if at all? http://cjonline.com/news/2010-10-28/college_hill_taxes_go_unpaid

What do we know about tax incentives and their impacts on other taxpaying citizens that are not the profiteers? About their impacts on the community overall?

We have created in the United States and Lawrence, largely in the last thirty years, a whole series of programs — a few of them explicit, many of them deeply hidden — that take money from the pockets of the poor and the middle class and upper middle class and funnel it to the wealthiest people in America.

Well, what is tax increment financing? I’ll tell you what it is. You go to the store with your goods and there’s a very good chance that that store has made a deal with the government that the sales taxes you are required to pay, that government requires you to pay, never go to the government. Instead, those sales taxes are kept by developers and used to pay the cost of the store. And typically in those deals, the store is tax exempt, just like a church.

Now, there are two ways that it’s important to think about this. One is, that means your kid’s schools, your police department, your library, your parks are not getting that money. And you’ll notice we keep saying we’re starved for money.

We’ve got to close schools, and we don’t have money for all sorts of things like after-school programs, even though we’re twice as wealthy. The second thing to think about is, imagine that you own Amy Goodman’s or Juan’s department store across the street. You suddenly have to compete with people whom the government is giving a huge leg up on. You think you would go broke after a while? Well, in fact, you will.

http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans http://www.uua.org/events/generalassembly/2008/commonthreads/115777.shtml

LivedinLawrence4Life 2 years, 9 months ago

Our city should not let them out of the special taxes for the parking garage across the street or allow them to get any sort of TIF. If their proposed tenant can't afford to pay for a parking garage, then don't build the building. Maybe Marriott can go into Comptons building across the street when those commercial tenants bail out.

LivedinLawrence4Life 2 years, 9 months ago

I changed my mind. Compton is sad that Fritzel has Boardwalk (Oread) and Park Place (Eldridge). Compton needs a hotel or he will continue to fall further behind in his Monopoly game.

onceajhawkalwaysajhawk 2 years, 9 months ago

Lets call it as it is... Compton, selectivley searched out his wife in college for her money. He used her daddy's money and bought properties at stupid prices nobody else would pay... Take it or leave it, he has "torched" his way into a position of power and Lawrence has paid the price. People in the know has laughed (and cried) about this for years..

JayhawkFan1985 2 years, 9 months ago

State law may very well allow public tax dollars to be spent on private property. That doesn't make it a good idea. If tax dollars are needed for the garage, it needs to be public garage, not one used only by hotel guests. I like the idea of our developers paying more attention to downtown, but this isn't the way to go for a lot of reasons. Another one is the scale of the building. It is too big for the neighborhood. The city should require 3d renderings so people can visualize how big this will be. Corliss needs to grow a pair and tell the old money developers in this town that we love them and want them to be successful, but they need to make money on their own without the city being their piggy bank. The city needs to stop claiming to be progressive and needs to set development standards that produce the quality of development Leawood, KS and boulder, co get.

TopJayhawk 2 years, 9 months ago

Hey Doug. Come over to Topeka. We'll give you your incentives, and take the jobs. Afterall, we could use the extra tax money it will generate, and we need more jobs for all the unemployed moochers in Lawrence to take.

just_another_bozo_on_this_bus 2 years, 9 months ago

He's already been in Topeka, and got lots of tax breaks. How's that turned out for ya?

George_Braziller 2 years, 9 months ago

He got lots of incentive to build his College Hill Townhouses. Couldn't sell a single one so he sold the entire development and now it's low-income housing.

just_another_bozo_on_this_bus 2 years, 9 months ago

"Couldn't sell a single one so he sold the entire development and now it's low-income housing."

Sometimes something useful comes out of a Compton project, even if it is completely inadvertent.

Matthew Herbert 2 years, 9 months ago

And in the process saw to it that the city massively abused the right of eminent domain. Both the city and Compton s*^£ the bed on that one!

Boston_Corbett 2 years, 9 months ago

At the same time the developers want left off the hook for helping to pay for the New Hampshire parking facility (public) so they can divert public tax money to pay for their Private Garage, the city next week will be considering spending $250,000 for maintenance repairs for the New Hampshire garage.

Development at that location was supposed to pay for the NH garage! That was part of the rezoning of the site for possible hotel purposes!

And they are now wanting $3-4 million in diversions of property tax money to themselves?

When they originally looked at that corner, the developers knew full well that it was part of a TIF district tied to the NH facility. This project has been in the planning mill for months, so they now write a letter in March 2012 asking to change the rules and ask for $3-4 million for themselves? (they don't even identify the amount of the incentives for which they ask)

As someone else above suggested, any diversion of property tax $ to pay for parking should be public parking or parking which would revert to the City when the hotel fails or changes use. And since they probably don't want/can't do that with underground parking or otherwise on that footprint, it is a total folly of a plan.

And this has nothing to do with the massing or scale of the project.

scaramouchepart2 2 years, 9 months ago

First the developers won't pay taxes for awhile. No place does it say they have to make the difference not paid at any time. Jobs- the jobs do not pay enough for the employees to live in Lawrence. So they do not pay city taxes and they take Lawrence dollars out of town and spend it elsewhere. We complain about our dollars not being spread around in town and then city government continues to support business, on the basis of jobs and more local taxes, that do not support local employees. Check - how many developments given city tax dollars really provided jobs for those who want to live here? If we continue our city government will have to change Lawrence's culture and force realtors and banks to cut housing prices more than half in order for the jobs the developers prattle on about as good economic reasoning to provide taxpayers money for their private bank accounts.

kernal 2 years, 9 months ago

Let's not forget what happened with Compton's College Hill Project in Topeka. One of the banks in the financing of that project had to take Compton to court to get his attention on his loan default last year. What's even worse, it doesn't begin to conform to the neighborhood - looks like beach front property in Baja.

another_view 2 years, 9 months ago

"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."

It should not even be a point of negotiation. It should be a below-the-line requirement.

Quite frankly, any asset which is purchased by a diversion of public property taxes (which is what a TIF is), which would otherwise be used to help fund police, fire, streets, parks, recreation, library, etc should only be used to pay for public assets which would help the development.... like streets, streetscaping, sidewalks, parking, street lighting, burying of utilities. Anything else is criminal in my view.

That lot or area of town is not "blighted" and has lots of potential uses, and TIFs are now being used for all sorts of private gain which exceed the notion of their original use.

If the hotel chain demands we purchase for them their below the ground private parking garage, the project is a non-starter in my view.

Does the city fund/should the city fund parking for other hotel/motels in town? No! (The Oread Hotel I believe is the exception to the rule, and that was a bad decision, for most of the same reasons)

puddleglum 2 years, 9 months ago

what could be cooler than giving compton more money?

I know, a repost: another compton TIF? and this time he wants to take away the parking garage TIF and make it his own? How much money does this guy need? why don't we just put a Compton TIF on everything in the county of lets say 3% and we will just give it to him because he needs more money? heck, we could even subtract 5% of our paychecks and just send him the money, because he needs it. you know, it is so expensive to build infrastructure. so he needs more money, its only fair that you and I should pay for it. so what if the Fritzels got away with it? just because someone let something stupid happen, we should allow it over and over? I think I need a TIF. every time some city employee steps on my land, I should be compensated by a $2.00 fee. after all, mowing my lawn and seeding it and watering it all cost so much money-not to mention that I actually had to do it myself-someone needs to pay me for my labor. Why not a TIF at the supermarket? why not a TIF on parking downtown? can't we just give compton all of our money? he could ride around in a golden chariot and hand out twinkies and ho-hos to the crowds! when will he build an astro-shield over his property? Then it will never snow inside compton-land. we could get Bill Self to hang out in there and teach basketball to everyone, then we wouldn't need flunky recruits from big cities, we could grow our own.

Ogallala_Kid 2 years, 9 months ago

Compton's huge project in Junction City is also in bankruptcy.....and Compton is now having to fight with some of his former buddies because of First Managements poor business practices and sloppy record keeping made when the bank money was flowing freely.

Looks like he could lose more than $800,000 because of it.

Don't Lawrence taxpayers now have a responsibility to help him out?

http://www.ksb.uscourts.gov/images/ksb_opinions/REN_10-05263-56.pdf

Richard Heckler 2 years, 9 months ago

Tax Breaks don’t work - DCJ

Become acquainted as to how we LOCAL taxpayers are far too generous for OUR own good:

“Free Lunch: How the Wealthiest Politically Connected Americans Enrich Themselves at Government Expense (And Stick You LOCALS with the Bill) http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

Not Smart Development Increases Taxes: http://www.sierraclub.org/sprawl/report00/intro.asp

Local Authority With Excellent links http://lawrencesmartgrowth.blogspot.com/2007_01_01_archive.html

On the tax dollar table: 1. $90 million sewage treatment plant = tax increase attached to sewer rates 2. 31st street expansion - no cost revealed as yet 3. more water and sewer lines who knows where 4. USD 497 tax increase plus new buildings 5. $20 million USD 497 athletic project needs paid for 6. USD 497 Building Maintenance http://www2.ljworld.com/polls/2007/oct/how_should_school_district_pay_20_million_maintena/ 7. New fire stations 8. More LPD staff etc etc etc

Richard Heckler 2 years, 9 months ago

The more new bedrooms the more empty bedrooms elsewhere in Lawrence,Kansas = tax dollar money holes.

When does infill become over fill? Perhaps over fill is here now?

Matthew Herbert 2 years, 9 months ago

Exactly. You are already seeing that happem in apartment buildings. There's not a complex in this town (real complexes, not dinky 4-plexes) that is at 100% capacity and yet more get built by the day. "Now Leasing" signs in the middle of March is not a good sign

headdoctor 2 years, 9 months ago

Guess many of those who are into real estate have been doing it wrong all this time. I thought if you wanted to buy a building, remodel it, or add to it, you would go to a lender and get the money.

tomatogrower 2 years, 9 months ago

Whatever happened to developers taking on the risk themselves? Why ask for a special tax? Why not just raise your prices? Do the conservatives on this board really agree with this? Isn't this anti-capitalism?

jafs 2 years, 9 months ago

Yes, of course it is.

It's amazing how many supposedly free market proponents don't actually want that system to work the way it's supposed to work.

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