The future of a $75 million apartment/retail development near Kansas University is in doubt after city commissioners approved a tax rebate less than what the development group had requested.
Tuesday night, commissioners approved on a 3-2 vote an 85 percent, 10-year tax rebate for the project at 1101 and 1115 Indiana St. That fell short of the 95 percent, 12-year tax rebate the Chicago-based development group had sought.
Jim Heffernan, a principal with HERE, LLC, left City Hall hastily after commissioners took their vote, and said he had no comment on the future of the project.
City commissioners, though, held a lengthy discussion about the project. Commissioners weighed the $75 million investment — one of the larger private projects in recent memory — with the concern that the tax rebate would cause numerous other apartment projects to request incentives in the future.
"There is the potential for a precedent here," Mayor Mike Amyx said. "I just keep asking myself whether it is appropriate to use incentives for residential development like this."
The project would build 237 upscale apartment units and about 13,000 square feet of retail space in a multistory building across the street from KU's Memorial Stadium.
Amyx and Commissioner Bob Schumm voted against any type of financial incentive for the project. Commissioner Terry Riordan joined the duo to vote against the requested 95 percent, 12-year property tax rebate. But Riordan joined with Commissioners Mike Dever and Jeremy Farmer to vote in favor of the 85 percent, 10-year tax rebate, which was recommended by the city's staff.
Commissioners in support of the incentive package noted that the city would not be required to finance any portion of the project or provide any money for infrastructure or such development costs. Instead, the rebate program — which is through the Neighborhood Revitalization Act — would only rebate the new taxes generated by the development. HERE, LLC, would continue to pay the property taxes currently generated by the property, which is developed with the Berkley Flats Apartments.
"We have no skin in the game, and we're talking about a substantial increase in revenue over the years," Farmer said.
Heffernan argued the project was worthy of the 95 percent tax rebate because it was a unique mixed-use project that combined apartments and retail development on a property that currently was underutilized by an aging apartment complex. The project also would include the state's first automated parking garage, which would use lifts and tracks to park cars without the assistance of motorists.
"We understand that asking for something like this is unprecedented, but we think our project is unprecedented in many ways," Heffernan said.
At a meeting of the city's Public Incentives Review Committee last month, Heffernan said reducing the incentives package to 85 percent, 10-years could be "terminal" for the project.
In addition to requesting the tax rebate from the city, HERE, LLC, also was seeking the same tax rebates from the county and the school district. Heffernan said he had hoped to have a hearing before those two groups later this month, but whether those efforts would continue was uncertain Tuesday.
In other business, commissioners:
• Approved 5-0 an 85 percent, 10-year property tax rebate for the renovation of a historic home and barn at 1106 Rhode Island St. A group led by Lawrence architect Stan Hernly will convert the property to a residential rental and an office project. The city also agreed to provide a $26,100 grant that will cover the cost of several city development fees.
• Agreed on a 4-1 vote to make $48,647 in changes to the construction of the recreation center at Rock Chalk Park to address problems with water leaking and seeping into the building. Commissioners, though, directed staff members to have discussion with the architects and the builders to determine whether any of those parties should help pay for the improvements because some commissioners questioned whether mistakes in the design and construction of the building contributed to the water problems. Commissioners were assured the proposed changes would correct the water issues.