City Commission approves tax break for Eldridge Hotel expansion

A rendering of a planned expansion of the Eldridge Hotel in the 700 block of Massachusetts.

The Lawrence City Commission voted 3-2 on Tuesday to adopt an ordinance finalizing a sales tax break for materials used on the Eldridge Hotel expansion.

Commissioner Matthew Herbert, who cast the deciding vote, was hesitant, saying he didn’t agree with the tax break but didn’t want to disclaim an incentive that had already been promised.

“I want to send a very loud message: If you send this project before this body in the future, it will not pass,” Herbert said. “The only reason it passes today is that the previous commission gave their word, and I’m sorry that they did.”

Expansion plans for the Eldridge Hotel, 701 Massachusetts St., include adding an estimated 54 guest rooms and space for a banquet room. It would expand into the vacant parcel to the south of the hotel.

A rendering of a planned expansion of the Eldridge Hotel in the 700 block of Massachusetts.

The ordinance will finalize a transaction started in February, when then-city commissioners approved a measure that signaled their intent to issue $12.5 million in industrial revenue bonds for the project.

Industrial revenue bonds would allow developers to receive an exemption from paying sales tax on construction materials, which would save them an estimated $460,000.

Of the $460,000 in waived taxes, approximately $108,000 would be city taxes and slightly more than $18,000 would be county taxes. About $329,000 would be the state’s.

Commissioners Leslie Soden and Lisa Larsen voted against the exemption. Both cited concerns with for-profit developments receiving tax breaks.

Commissioner Stuart Boley and Mayor Mike Amyx voted for finalizing the deal — a move that city staff recommended.

Developers of the property have already spent an estimated $3.5 million worth of construction materials using an exemption certificate issued by the Kansas Department of Revenue.

If the City Commission were to not issue the industrial revenue bonds, Eldridge Hotel would be required to pay back any sales tax savings on those purchases.

“They are operating on our word,” Amyx said. “In this case, we passed something saying it was the intent of the city of Lawrence that we issue these bonds.”

Boley said not finalizing the exemption “could present significant problems to us, as we go forward, with economic development.”

The ordinance will appear on next week’s City Commission agenda, and commissioners will be asked to give it the final go-ahead.

City commissioners also made decisions Tuesday about how the Eldridge Hotel expansion should affect downtown parking and sidewalk access.

After hearing concerns from businesses located on the west side of the 700 block of Massachusetts Street, commissioners agreed to add a provision mandating the hotel not close Massachusetts Street parking or sidewalk access until Jan. 2.

Contractors planned to start work this month and be finished with construction in December 2016.

Cindy Hopper, co-owner of Sweet! Baking Supply, 717 Massachusetts St., told commissioners that if the area were closed before the holidays, it would significantly affect the business’s fourth-quarter sales.

“Half of our sales come in the fourth quarter,” Hopper said. “We may be just one store on Mass.; we may be small, but we do think we’re valuable.”

According to site plans, during construction there will continue to be two-lane traffic along Massachusetts Street, though a portion of the 700 block will be narrowed to 12 feet and vehicles traveling north won’t be able to turn left onto Seventh Street.

Parking from 701 to 705 Massachusetts St. will be restricted, and a section of sidewalk in front of The Eldridge Hotel and along Seventh Street will be closed.

Paul Werner with Paul Werner Architects said Tuesday that a pedestrian walkway could be established on the affected west side of Massachusetts Street about three or four months after construction begins.

Commissioners also heard Tuesday from Chris Burger, an attorney with Stephens & Brand law firm who represents the owners of the building housing restaurant 715.

Owners of that building — which is located just to the south of the vacant lot the Eldridge is expanding into — are working with the hotel to make sure the property is protected.

Not all of the owners’ concerns have been addressed, Burger said.

Matt Goff, a lawyer with Barber Emerson law firm who was representing the Eldridge, told commissioners, “I don’t know that it’s your role to enforce this private debate.”

Herbert referenced the industrial revenue bonds and tax abatement, replying, “If you don’t want the government in your business, don’t ask the public for taxpayer subsidies.”

The City Commission agreed that if the parties could not come up with an agreement, the issue would again be brought before commissioners.

Commissioners also agreed to lease the Eldridge the public parking lot at Seventh and Vermont streets for $8,000 monthly, with a maximum of $120,000. The city would pay back $15,000 to the Eldridge after the hotel restores the lot to its prior condition.

The funds from the lease would go to the city’s general fund and be made available for the affordable housing trust fund.

At the end of discussion, Amyx thanked Boley for working to change the original lease agreement. According to the City Commission agenda for the Sept. 29 meeting — for which the Eldridge issues were originally scheduled — the hotel had offered to pay the city $6,720 total in parking fees for the 28 closed spaces.

In other business, commissioners:

• Unanimously decided to move forward the plan to pave with concrete the river trail between Burcham and Constant parks. The issue came before the commission after citizens cited concerns with riverbank erosion. Commissioners said Tuesday they were satisfied with the Parks and Recreation Department’s plan to maintain the area, including planting trees and installing stabilizing material.

• Unanimously voted to send a letter of condolence to Kansas City Mayor Sly James and Kansas City Fire Chief Paul Berardi after two firefighters died Monday night while battling an apartment building fire.