Rendering of proposed retail/apartment building at Eighth and New Hampshire. Plans call for a development team led by Lawrence businessmen Mike Treanor and Doug Compton to add four stories on top of the former Pachamama’s building at Eighth and New Hampshire streets.

A plan to add four stories of apartments to the former Pachamamas building in downtown Lawrence is a step closer to reality as a key city board recommended approval of a tax incentive for the project Tuesday.

The city’s Public Incentives Review Committee agreed on a 5-1 vote to recommend approval of an incentive that will allow the developers of the project to avoid paying about $315,000 in sales taxes on construction materials that will be used to build the project.

But the tax incentive still must win approval from the City Commission, and it is unclear whether it has the votes. Lawrence City Commissioner Leslie Soden, who also serves on the Public Incentives Review Committee, was the lone vote against the project at Tuesday’s meeting. Soden and Commissioners Stuart Boley and Matthew Herbert all won City Commission seats in April after running campaigns that questioned some of the incentives past City Commissions had granted.

Soden said she voted against the incentive request, in part, because the project proposed to build 55 new apartments but is not proposing to build any additional off-street parking. The special zoning district that exists in downtown allows for development to occur without building new off-street parking. Soden said the city’s code may allow such a practice, but she’s not sure the city should be providing an incentive for development to occur in that manner.

“When you don’t provide parking for 55 new living units in downtown, that obviously has the potential to create some issues,” said Soden, who is concerned the residents of the building will park in the adjacent East Lawrence neighborhood.

The development team — which is led by Lawrence businessmen Mike Treanor and Doug Compton — pointed to a City Hall study that showed there was an average of about 150 long-term parking spaces that were unused at any given time in the northeast quadrant of downtown. Residents of the building will be able to buy an annual parking pass from the city and use those spaces for their parking needs, a representative of the development group said.

The project won enthusiastic support from several members of the public incentives committee, in part because local governments are expected to quickly recoup any lost sales tax dollars due to an increase in property taxes that the development will produce.

“It looks like the first year property tax revenue would far exceed what it would cost us in lost revenue,” said Douglas County Commissioner Mike Gaughan, who is a member of the review committee. “That’s good to see from my perspective.”

The development group is not seeking any incentives that would reduce the amount of property taxes the development pays. Bill Fleming, an attorney for the development group, said the new construction is expected to result in about $115,000 in additional property taxes paid each year at the site.

The city and the county would stand to see a net increase in the amount of taxes received from the property almost immediately because the bulk of the sales taxes being exempted go to the state. Of the approximately $315,000 in sales taxes that are expected to be abated, a little more than $225,000 are taxes that would have gone to the state. The remaining portion would have gone to the city and county coffers.

Fleming said the sales tax exemption would help the approximately $7 million project control costs, and pass some savings along in the form of lower rents. The project, though, is not being built as a rent-controlled development, like some of the projects that have taken advantage of affordable housing tax credits offered through the state. Fleming estimated that one-bedroom units probably would rent for about $1,000 a month, which he said is less expensive than other comparable new units downtown.

City commissioners are expected to consider the incentive issue in the next few weeks.