On the street
Should there be a citywide vote to approve the $25 million recreation center as part of the larger Rock Chalk Park?
If the city will have to foot the bill, in a democratic society we need a vote.
Decision day is nearing on what could be the largest city-funded project in recent memory.
Lawrence city commissioners at their Tuesday meeting are scheduled to review a set of proposed agreements that formally would commit the city to build a $25 million regional recreation center as part of the larger Rock Chalk Park project in northwest Lawrence.
The project has had many twists and turns over the past year. Here is an effort to answer some of the more common questions associated with the planned complex.
Q: Where would the project be built?
A: In Northwest Lawrence, north of the Sixth Street and South Lawrence Trafficway interchange.
Q: What would be built at the site?
A: Think of the project as having three parts:
· Part 1: The city's portion. It would include the 181,000-square foot recreation center containing eight full basketball courts that could be converted to 16 half courts or volleyball courts; an indoor turf field; an eighth-mile walking track; a fitness room; a gymnastics area; classroom space; an area set aside for a “wellness center”; and various other components. In addition, there would be eight lighted outdoor tennis courts; a parking lot; a detention pond to hold stormwater runoff; and various trails that go through a wooded portion of the property. The city portion of the project will cover about 26 acres.
· Part 2: The KU portion. It would include an Olympic-grade track and field stadium with seating for up to 10,000; a 2,500-seat soccer field; a softball stadium with room for up to 2,500 seats; a 28,000-square-foot indoor training area for softball; and multiple parking lots. The KU portion will be on about 64 acres.
· Part 3: Possible future expansion. The plans submitted to the city include at least four facilities that are not proposed to be built now, but could be built on the KU portion of the property in a future phase. They include an indoor arena with “3,000 seats for sporting events and additional 800 seats for concerts;” a 4,000-seat amphitheater; eight outdoor tennis courts; an indoor tennis facility; and a lacrosse field. All would have to win land-use approvals from the City Commission before they could be built.
Q: What about parking?
A: The city’s portion of the project will have about 800 paved parking spaces. The KU portion will have about 700 paved parking spaces. It also will have an unpaved area that can accommodate about 700 vehicles for overflow parking. Agreements will be in place to allow the city to use the KU parking spaces, and vice versa.
Q: Who would own what?
A: The city will own the 26 acres, the recreation center building, the eight outdoor tennis courts, and the 800 rec center parking spaces. The city will pay $780,000—$30,000 an acre—to the KU Endowment entity to purchase the land the recreation center will occupy.
An entity controlled by the Kansas University Endowment Association — RCP LLC — will own the ground the KU facilities are built upon. An entity controlled by Lawrence businessman Thomas Fritzel and his wife, Dru, — known as Bliss Sports LLC — will own the actual KU facilities for the first 50 years. During that time, Kansas University Athletics will lease the facilities from Bliss and have full use of them. At the end of the 50-year period, ownership will revert to a KU entity.
Q: Why won’t KU own its facilities from the start?
A: The simple answer is financing. The Fritzels — through Bliss Sports — have offered to make a philanthropic gift to the university by financing the KU facilities at below-market rates. KU will make lease payments over 30 years totaling $39 million. KU officials believe the fair market value of the facilities is closer to $50 million.
Q: Is Fritzel proposing something similar for the city recreation center?
A: Not quite. What Bliss and KU Endowment have agreed to do is guarantee that the city won’t have to spend more than $25 million to build the center and the necessary infrastructure to serve the center.
Q: Is that a good deal for the city?
A: Many city leaders believe it is a good deal. The city thinks the fair-market value of the city project will be more than $30 million — about $19 million for the recreation center and about $13 million for parking and infrastructure. Others have questioned how the city arrived at that number, especially since the infrastructure and parking costs include projects that will benefit the KU facilities as well.
Q: How will we know if it is a good value?
A: The city in recent weeks announced it will go through a normal bidding process to choose a contractor to build the recreation center. That should settle that part of the question. The infrastructure and parking part of the project, however, will be controlled by KU Endowment and Bliss. The city will have access to all the invoices for that part of the project and will be able to see if prices are coming in above market norms. Plus, the city’s costs are capped at $25 million.
The bigger question may be how much of the infrastructure costs the city will pay versus how much the KU parties will have to pay. It depends on the size of the bids to build the center. The most likely scenario — based on current architectural estimates — is that the city will pay 50 percent or more of the parking and infrastructure costs. Whether that is the right amount depends on how you feel about the balance of the city-KU partnership.
Q: I thought the city wasn’t going to go through a normal bidding process for the recreation center. What's the plan?
A: Originally, the city was planning to use a modified bidding process in which KU Endowment would have controlled the process and given Fritzel — who is a builder by trade — the chance to match any competitor's low bid. But that plan was scrapped Jan. 31, in part because city residents were expressing concern about the process. Instead, the city will open the bidding to any qualified construction company.
Q: Does the city think it will make money off the recreation center?
A: Not directly. The city estimates the recreation center will have an operating budget of about $1 million. It estimates it will generate about $650,000 in revenue through rental fees, classes and other activities. The remaining $350,000 will be funded through the city’s sales tax fund. The city hopes the project will contribute to the economy by drawing visitors and event participants to town.
Q: How many tournaments and outside events will the city need to attract to meet that $650,000 revenue estimate?
A: About 32 per year is what City Manager David Corliss has estimated.
Q: Will my taxes go up to pay for this project?
A: Not as currently planned. The city has money in a sales tax fund that is becoming available, in part, because the city is paying off the bonds for the Eagle Bend Golf Course and the Community Health Building.
But there are always caveats. If the economy tanks and sales tax collections go down, the city would have to raise taxes to pay for the recreation center debt. Plus, the city could use this newly available sales tax money to pay for other city projects, which otherwise may require a tax increase in the future.
Q: Did I hear that this project is going to get a break on property taxes?
A: That’s the plan. The KU portion of the project, it has been determined by the state, is not eligible for KU’s standard automatic property tax exemption. That’s because Bliss Sports, which will own the facilities for 50 years, is a for-profit company. But the city can issue Industrial Revenue Bonds for the project. Those come with a property tax abatement for 10 years. It is not clear what happens for the other 40 years Bliss owns the facilities. There has been mention the KU entities will seek special state legislation providing a permanent property tax abatement for the project.
Q: Hasn’t there been an issue with Thomas Fritzel paying taxes and other fees due on another of his projects, in Junction City?
A: Fritzel is a partial owner of Fort Development LLC, which is behind on property taxes and special assessments related to a struggling Junction City housing development. The Geary County Treasurer’s office earlier this month provided documents showing the company was behind on its property tax payments and fees by about $3.4 million. Unlike the Junction City project, the Rock Chalk Park project does not propose that Fritzel or Bliss sports would be responsible for any special assessments to pay for the infrastructure related to the park.
Q: If a for-profit company is going to own the KU facilities, will Fritzel and his company be using the facilities to generate a profit, for instance by running the concession stands, charging for parking, renting the facilities to non-KU entities, etc.?
A: Fritzel told the Journal-World in January that Kansas Athletics will be in charge of all events that are hosted at the facility. Fritzel said the only revenue he will receive from the project are the lease payments from Kansas Athletics. The agreements spelling out Fritzel’s role in the KU project, however, haven’t yet been made public. Fritzel has said they will be once they are signed. Any non-athletic events that are hosted at the site will require a special-use permit from City Hall.
Q: I heard Bill Self’s Assists Foundation was going to make a donation to the city’s recreation center. Is that true?
A: Yes. City officials as late as Friday had said they thought the Assists Foundation no longer was going to make a financial donation to the recreation center. But after that was reported by the Journal-World, the executive director for the foundation said a donation of approximately $1 million was still planned to be made to the city. Erin Zimney, executive director of the Assists Foundation, said the organization likely would wait until the city formally accepts a construction bid to build the project — likely in April — before formalizing a donation.
Q: Is $25 million really going to be all the city pays for the facility?
A: There will be some additional costs to equip the facility with fitness equipment, desks, sports equipment, bleachers and other such items.
Q: Has this idea for a recreation center come out of the blue?
A: Not exactly. The idea of a new recreation center in Lawrence has been discussed for a long time. The city actually approved a major center for Centennial Park in the 1990s, but then backed away from the project just prior to signing the construction documents.
City Manager David Corliss has cited the need for more recreation center space in northwest Lawrence in several of his recent budget proposals to the City Commission.
The City Commission in November 2011 agreed on a concept of a $15 million recreation center that would be funded with $12 million in city funds and $3 million in private donations. But just weeks after that meeting, the focus shifted to the intersection of Sixth Street and the South Lawrence Trafficway, where a group led by the Schwada family was offering a donation of land. Fritzel then generated interest from KU in the concept, the city’s recreation center grew in size and price, and the project has dominated City Hall—and Lawrence—discussion ever since.