A plan to build the community’s largest shopping center has a large hill to climb if it hopes to win approval at Lawrence City Hall.
A majority of city commissioners recently told the Journal-World that they have concerns about a proposal to build a little more than 500,000 square feet of retail, restaurant and hotel space on a site just southeast of the South Lawrence Trafficway and Iowa Street interchange.
Driving that concern is another project: The Rock Chalk Park sports complex. The city is investing $22.5 million for the sports complex near Sixth Street and the South Lawrence Trafficway. The northwest Lawrence intersection adjacent to Rock Chalk has been zoned for about 600,000 square feet of retail and commercial space, but so far retailers haven’t come to the sites. Commissioners worry that if a new south Iowa Street shopping center is built, it will be years before retailers ever locate in northwest Lawrence.
“The city has made a large investment at Rock Chalk Park,” City Commissioner Jeremy Farmer said. “We’ve really already put our eggs in the basket that we’re expanding out west.”
A representative with the south Iowa development said his firm is still trying to decide whether to ask city commissioners to vote on the project. The Lawrence-Douglas County Planning Commission dealt the project a setback last month by recommending denial of the project, but ultimately city commissioners could still choose to approve it.
“We believe we can provide a project that is good for the community,” said Chris Challis of North Carolina-based Collett & Associates. “We were surprised by the protectionist approach we encountered. We think the situation is kind of misunderstood.”
Challis said he doesn’t think his company’s Southpoint proposal is doing anything to hold back the northwest development, which is known as Mercato. His company has announced that Old Navy, Designer Shoe Warehouse, Academy Sports, Marshalls, Ulta Beauty and others have said they want to be tenants of the center. He said the Mercato site was available to those retailers, and would have allowed them to open significantly earlier than the 2016 projected opening of Southpoint.
“I think people need to ask themselves, if a retailer has selected this market and wants to be open as soon as possible, why wouldn’t they select the site that is most readily available instead of waiting two years for our site?” Challis said. “Mercato beat us out of the gate. If they had a site those retailers wanted to be at, why wouldn’t they be there?”
But commissioners said that sort of logic doesn’t take into account how dramatically the area around Rock Chalk Park is going to change. The city’s 181,000-square-foot recreation center will open in September, and the complex also will host softball, soccer and track events for Kansas University. Leaders hope the facilities will attract both regional and national level youth sporting competitions that will bring thousands to town.
“There is housing that is being built out there too,” said City Commissioner Bob Schumm. “I think when the recreation center opens you’re going to see a whole new level of demand for services out there. I think we all just need to sit back, relax a little bit and see what happens.”
Matters of money
But the Southpoint proposal comes at a time when city officials particularly are in need of new tax dollars. Commissioners approved a property tax rate increase as part of the 2015 budget, and are expected to ask voters to approve a sales tax increase in November to fund a police headquarters.
Southpoint officials have produced a study that estimates the shopping center would add $132 million in retail sales to the community, which would add $1.1 million a year to the city’s sales tax collections in 2016 and $2.1 million by 2020. There has been a debate, though, about how many of those dollars would be new to the community and how many would come at the expense of existing retailers in town.
Some commissioners are convinced the Southpoint project would significantly cut down on the amount Lawrence residents travel to Kansas City or Topeka to shop and would add to the city’s coffers.
“That is the serious concern I have in not allowing this development,” said City Commissioner Mike Dever. “We have raised the mill levy. We may increase the sales tax rate. There is a lot to be said for instead just increasing the amount of dollars spent here in the community.”
But Dever stopped short of saying he could support the Southpoint project as proposed. He said he thinks it is undesirable for a community to have the bulk of its retail concentrated on one end of town. He said he thinks the Southpoint project would have to be reduced in size before it would get serious consideration from the City Commission.
Challis said the company is considering submitting a smaller proposal. But based on other comments from commissioners, it is not clear that a smaller proposal would win approval. Dever said there is a key question that is tough to answer: How long will it take for the northwest Lawrence area to develop?
“If we think it is going to happen soon, it probably is wise for us to hold off on approving a development to the south,” Dever said.
A matter of time
The Mercato group — which is led by members of the Fritzel and Schwada families — haven’t been able to say when the project may begin attracting retailers. Pat Peery, a veteran retail site selector, recently has been brought on board to broker the project. Peery said he didn’t have any specific tenant news to share.
“We are working really hard on the design of the site to make sure it takes full advantage of Rock Chalk Park,” said Peery, who is with Lane4 Property Group in Kansas City. “We need to get aggressive, and we are being aggressive.”
City commissioners seem split on how much time they should wait for Mercato to develop. It has been zoned for retail development for more than six years, although part of that time period was during the Great Recession when retail deals were few and far between anywhere.
Farmer said another six years of no retailers likely would require the city to again consider expanding to the south. But City Commissioner Terry Riordan said he has a much shorter timeline in mind.
“If we say we’re never going to build on the south side, I think that would be a mistake,” Riordan said. “I think it is reasonable to give people a year or two to do something on the west side. If they don’t have something done in 12 to 24 months, then we ought to reconsider it.”
Peery said he has heard that message.
“A year is a long time,” he said. “We had better have deals in that time.”
Commissioners also indicated the terms of those deals will be important. The developers of Southpoint have said they don’t intend to seek any financial incentives from the city. A majority of commissioners said they aren’t interested in providing financial incentives — such as tax increment financing or special taxing districts — to attract retailers to Mercato.
“I think they have gotten all the momentum they are going to get from us,” Riordan said. “The rest has to come from them building something.”
Peery said he didn’t want to comment on whether a future Mercato deal would need financial incentives from the city.