Lawrence officials now are acknowledging the city’s costs for a proposed regional recreation center have increased since the project has begun working on a partnership with the Kansas University Endowment Association.
But city officials also quickly point out the number of amenities in the project has grown significantly.
“It is going to be a little bit more expensive,” said Mayor Bob Schumm. “But it is quite a bit larger and should yield quite a bit more value.”
City officials will host a public meeting from 7 p.m. to 8 p.m. Thursday at the Free State High School commons area, 4700 Overland Drive.
City leaders will be going over cost estimates that have increased as the proposed site of the project has shifted from the northwest corner of the Sixth and South Lawrence Trafficway intersection to a site that is just north of the northeast corner of the Sixth and SLT interchange.
When the city was considering building the multi-gym recreation center/youth fieldhouse on the western side of the SLT, it was estimated the city’s costs would check in at $29 million.
As the city has shifted its focus to the site east of the SLT, the project is now expected to cost the city $25 million. But there is a a key difference in the new cost estimates.
When the city was considering the west of the SLT deal, which was part of a partnership with development groups led by the Schwada family and Thomas Fritzel, $24 million of the $29 million in costs would have been paid through a lease-purchase agreement with Fritzel.
At the new site, the lease purchase agreement is no longer being offered, which means the city plans to debt-finance the entire $25 million the city will owe. That’s significant because the city will pay interest costs on the $25 million amount. Under the previous deal, the city would not have paid interest costs related to the $24 million lease-purchase agreement.
City Manager David Corliss is estimating the city will pay about $150,000 a year more in interest costs — or $3 million, if the debt is financed for 20 years — compared with the deal offered at the previous site.
The new site is controlled by the KU Endowment Association. The Endowment Association is proposing to build the recreation center — using Fritzel as the general contractor — for the city. Once the center is completed to the city’s satisfaction, the city would pay KU Endowment a $25 million lump sum payment, at which point the city would own the building and the land the city’s facilities sit upon.
The recreation center was proposed to be nearly identical at both the west and east sites, with eight gyms, a walking track, fitness center, multipurpose area and other amenities. But the eastern site proposed by KU includes more than double the amount of land for the entire recreation complex, which will allow the city to build lighted tennis courts, a hike and bike trail, and 1,400 parking spaces.
The larger property also will give Kansas University more room to build its facilities, which will include a track and field stadium, a soccer field and a softball stadium.
The additional parking the site offers and the proximity to KU’s facilities are expected to help the city be more successful in attracting regional or national youth tournaments to the site, which city officials say will provide a boost to the economy.
“Anytime we have to spend more money, it disappoints me,” City Commissioner Mike Dever said. “But if we want to take advantage of the significant opportunities of being partnered with KU, this is how we have to do it.”
But the cost increase — and the increasing scope of the project — continues a trend from the past year.
At the City Commission’s Nov. 8, 2011 meeting, city commissioners were still discussing building a recreation center on city-owned land at Sixth Street and Overland Drive. At that meeting, a majority of commissioners agreed the city should look at structuring a deal that would involve $12 million from the city’s coffers and $3 million from private sources such as Bill Self’s Assists Foundation, which has expressed an interest in supporting the center.
At that time the City Commission was contemplating a smaller facility, but it still would have been the largest recreation center in the city. City officials last November were presented with an architectural report that estimated a 75,000 square-foot center with five gyms, a walking track and a fitness room could be built for $13 million to $15 million.
Now, the proposed recreation center is 181,000 square feet, and the city’s cost for the center and necessary infrastructure has grown to $25 million.
City leaders, however, said they believe the new $25 million proposal represents a good value for the city. An architectural report estimates the total value of the city’s new recreation center and infrastructure will be about $33.5 million.
The city’s costs will be capped at $25 million plus interest. Any additional costs will be paid for by the KU Endowment Association and its donors for the project, which haven’t been publicly announced by the association.
“I started out on this project fairly skeptical,” Schumm said. “But as I’ve studied it and looked at what is possible, I’ve really changed my mind and my attitude.
“I think it is an extraordinary opportunity for the city because of the notoriety we’ll receive and the events we can host with a facility like this. It has grown in size, but also has grown in terms of potential.”
But questions about the project remain with some commissioners. The project is scheduled to be paid for with existing sales tax dollars that previously had been used to pay for the debt for the Community Health Building and the Lawrence Indoor Aquatic Center.
City Commissioner Mike Amyx, though, said he is worried about what happens if sales tax collections take another downturn. He also said he is concerned about tying up such a large amount of money for so long compared with building a smaller facility on land already owned by the city.
“I think we really have to ask ourselves whether the cost difference to locate this on a site in northwest Lawrence is something that we really can justify,” Amyx said. “I haven’t hidden at all that I have concerns about that.”
After Thursday’s public forum, commissioners are scheduled to discuss the project at Tuesday’s weekly City Commission meeting. At that meeting, commissioners make direct staff members to begin crafting formal agreements with the Endowment Association.