Subscribe to the email edition of Town Talk and we'll deliver you the latest city news and notes every weekday at noon.
News and notes from around town:
• When it comes to the proposal to build a multi-story hotel/apartment building at Ninth and New Hampshire, there is now a new question to fight over. Neighbors long have been gearing up to fight over the question of: How tall? Now, there also likely will be a fight over: How much?
Developers of the proposed project have filed a letter with Lawrence City Hall giving more details about what type of incentives the project will need to be feasible. It is no surprise the project is asking for some tax assistance. The development group — led by Lawrence businessmen Doug Compton and Mike Treanor — has said all along that it would request some incentives. But now, the group has gotten more specific.
In its letter to City Hall, the group asks for three main pieces of financial assistance:
— A special 1 percent sales tax on purchases made inside the building. The special tax would be charged on hotel rooms, food and drinks at the building’s restaurant, and also on any retailers located in the building. The special tax would not extend to any other building or property in downtown.
— Use of tax increment financing. A TIF is a type of property and sales tax rebate system. Basically in a TIF district, you look at how much property and sales taxes a property is generating currently. Then you look at how much property and sales taxes the property is generating after it has been redeveloped. The difference between the two — the increment —goes into a special city fund instead of being disbursed to the city, county and school district to be used for general purposes. The money in the special fund is then rebated back to the development group to pay for qualified infrastructure expenses. More on what that means in a moment.
This TIF has a twist. The proposed site of the hotel/apartment building — the southeast corner of Ninth and New Hampshire — is already in a TIF district. It has been since 2000. The district was created to help pay for the public parking garage that already is built across the street from this site. But the developers want to take it out of that district and create its own district. The current district is set to expire after about seven years. The developers want their new district to last for 11 to 12 years. The district would be set up as a “pay-as-you-go” type of arrangement. In other words, the developers will have to finance all the infrastructure improvements on their own. The developers then will be paid back as the infrastructure projects are completed. Some communities take out city-debt to pay for the infrastructure and then reimburse the city’s coffers from the special TIF fund. The city’s policy generally discourages that type of incentive.
— Use of industrial revenue bonds issued by the city. This is mainly a financing issue for the development. Industrial revenue bonds generally have a lower interest rate than a traditional commercial loan would offer. The bonds technically have the city’s name on them, but the city has no legal obligation to pay them, and commissioners generally are told they pose no great risk to the city’s credit rating even if they did default. Quite a few projects around town have used them, including even some hotels. The old Lawrence Holidome used them decades ago, for example.
All the money garnered from the incentives above must be used to pay for infrastructure items. In other words, it can’t be used to build hotel rooms or restaurants and such. But the law allows infrastructure to be defined as parking, even if it is not public parking. That is what the bulk of this incentive money will be used for. The project proposes to build two levels of underground parking to serve hotel guests and apartment residents.
Before you begin to yell too loud about the idea of using public incentives to pay for private parking, know this: It already has happened in Lawrence. The Oread hotel on the edge of KU’s campus used almost exactly the same set of incentives to build its below-ground parking and related infrastructure. That parking is not available to the public.
Bill Fleming, an attorney for Treanor Architects and the development group, said downtown projects likely are going to need some help if the city wants them to provide off-street parking.
“This is just a recognition that it is very, very difficult and expensive to provide off-street parking in downtown,” Fleming said.
Downtown zoning does not require any development in the downtown district to provide off-street parking. But the developers in this group have been honest and told the city that the hotel chain — Marriott — won’t move forward with the project unless it provides a significant amount of its own off-street parking.
City commissioners have been scheduled to hear an appeal of the Historic Resources Commission’s rejection of the project on March 27. But Mayor Aron Cromwell tells me that he wants to hear both HRC issues and the financial incentive request at the same time. That may require pushing a hearing on the entire project into April.
The city has hired a third-party consultant to review the numbers associated with the project to determine if it feasibly can be built without the incentives.
• I have not seen it yet, but I understand there is a 3-D, to-scale model of the proposed hotel/apartment building on display at The Percolator art gallery at 913 R.I., which is right behind the proposed site. The proposed hotel/apartment building is six stories in some locations and three stories as it gets closer to the neighborhood on the east. Neighbors have expressed concern about the height of the project. This model was built by folks generally opposed to the project, but I’ve been assured that the model is built to scale to give folks an accurate representation of how it will look on the site. When I talked to a representative with Treanor, the architects hadn’t yet seen the model.
The idea of models does come up at City Hall occasionally. (No, we’re not sitting around Tuesday nights talking about the Sports Illustrated swim suit issue.) Sometimes people argue City Hall needs to insist plans for large projects include a 3-D model because they contend simple renderings don’t give a good perspective on issues of size and mass.
• Here’s an update on the saga of the Lawrence Athletic Club. It looks like longtime owner Rick Sells is doing his best to keep hold of the club for the foreseeable future. As we reported last week, Meritrust Credit Union is seeking ownership of the property and business after Sells’ Junkyard’s Jym corporation defaulted on a $2.4 million note.
We also reported that Sells apparently remains involved in the management of the club, although Sells did not return phone calls seeking comment.
Well, Sells has begun distributing a letter to members that sheds a little more light on the subject. In the letter, Sells said he has formed a new company called So Big Fitness, LLC. That company has a lease with Meritrust to continue operating the Lawrence Athletic Club. Sells, in the letter, said the credit union understands the LAC property and name is worth more as an operating business than in a liquidation. Sells said he expects to work out a long-term arrangement with Meritrust.
“We expect and hope to be in the athletic club business at the LAC for many years to come,” Sells said.
As we reported, Sells Junkyard’s Jym corporation fell into financial difficulty after it lost a nearly $400,000 legal dispute with the Caspian Group, the landlord for LAC’s former East Lawrence location. Sells said in the letter that he is continuing to “work toward a resolution of its legal issues” with the Caspian Group.
• Hot out of the e-mail inbox, the city of Lawrence received a nice award Thursday morning. The city received a top award from a national group that promotes transparency in city government. Sunshine Review named the city of Lawrence's Web site one of the 214 best in the country for transparency about government operations. The city competed against other cities, counties, school districts and other government agencies from across the country. Lawrence's Web site received an A+ grade from the non-profit organization. I doubt there are many folks in Lawrence who use the city's Web site more than I do, and I can tell you there is an awful lot of information that the city provides. It does provide a good window into city government.
Several other Kansas governments also were honored by the organization. They included: the Derby school district; Johnson County, Kansas City/Wyandotte County, Overland Park, Sedgwick County, Topeka and the Wichita school district.