photo by: Nick Krug

Lawrence resident and former city commissioner Bob Schumm is seeking a 10-year tax abatement for his Vermont Place development, which would consist of condominiums and office space. The lot is pictured on Monday, June 6, 2016.

Several Lawrence groups — one dedicated to economic development, one to public incentives and another to affordable housing — are refining their thoughts on potential changes to the city’s policies that govern financial incentives.

It will be August before their input goes to the City Commission. But commissioners will be faced Tuesday with the first request for tax breaks initiated since they started on the path in January to alter public subsidies.

Commissioners will first be asked whether they want to consider the request at all. If they do, commissioners must direct staff on what set of policies it wants the project to adhere to.

“That’s what we want to know,” said city Economic Development Director Britt Crum-Cano. “That’s what we’re looking for direction on.”

A vote of approval Tuesday would kick off a months-long process of city staff analyzing the project and its need for financial incentives, followed by consideration from the Public Incentives Review Committee and then the City Commission.

The project, “Vermont Place,” is a five-story mix of commercial space, offices and condominiums in a now-vacant lot at 815 Vermont St.

Bob Schumm — who served on the City Commission from 1979 to 1981, 1987 to 1993 and 2011 to 2015 — owns the property and is behind the development.

photo by: Nick Krug

Former City Commissioner Bob Schumm has filed plans to build a five-story building on a pair of vacant lots in the 800 block of Vermont Street.

Schumm is seeking a 10-year tax rebate under the Neighborhood Revitalization Act, the first five years of which would be for 85 percent of the new tax value added to the property as a result of the project. In the last five years, the rebate would lessen to 50 percent.

According to Schumm’s application for incentives, annual property taxes on the property are currently $5,977. The County Appraiser estimated the taxes would range from $116,295 to $185,793 once the building was complete, Schumm said in the application.

The total cost of the project is estimated at $8.8 million.

In addition to a tax rebate, Schumm is asking for $7.7 million in industrial revenue bonds, which would exempt him from paying sales tax on construction materials.

Changes to incentives

The potential changes to Lawrence’s policies on economic development incentives are not yet final. But one of them — proposed in January by Commissioner Matthew Herbert — is to set a 10-year, 50 percent cap on tax rebates, which Schumm’s request goes beyond.

Another change is to require a “but-for” analysis for industrial revenue bonds. The analysis, which comes at a cost to the developer, determines whether there’s a financial need for the incentive. There’s also a proposed affordable housing mandate that Schumm’s development would trigger if it were already policy.

As the proposed mandate is currently written, a residential development containing between four and 49 units and receiving incentives must set aside 10 percent of units as affordable. Schumm’s proposal includes 11 condominiums, one of which he plans to keep for himself.

No matter if the new policies are applied to the development, Vice Mayor Leslie Soden said she won’t vote to approve incentives for a project unless it meets one of two goals: creating primary jobs or providing affordable housing.

photo by: Nick Krug

Bob Schumm

“The project needs to show a clear public good,” Soden said. “With what I’ve seen so far, I don’t plan on voting for it because it’s lacking one of those two main things.

“Whether it’s written in policy or not, that’s what I campaigned on. I’m continuing that philosophy.”

Schumm attended a meeting of the Joint Economic Development Council on Monday, at which members gave feedback on the changes to incentives policies. He raised concerns to the council on both the affordable housing mandate and requiring a “but-for” analysis for industrial revenue bonds.

The benefit of industrial revenue bonds to developers would not be “worth all the hoop-jumping” of going through a but-for analysis, Schumm said. Bill Fleming, an attorney with the development group led by Mike Treanor and Doug Compton, has previously voiced the same concern. Fleming noted an analysis would likely determine the project could be done without the bonds because their financial benefit is “not significant.”

City Manager Tom Markus responded that the proposed change to industrial revenue bonds might need to be altered.

“There’s an argument there was not enough gain to pursue IRBs with the fee setup the city was suggesting,” Markus said. “There’s probably some merit to that argument.”

About the affordable housing requirement, Schumm suggested the length of time units are required to be affordable should end when the term for public incentives ends. The current proposal calls for units to remain affordable for at least 15 years.

“There ought to be some thought in trying to balance the term of the incentive with the requirement for giving back to the community,” Schumm said. “It’s mismatched, and there’s not a revenue stream for your expense. People may say, ‘It’s not going to work. I’m not going to do it.'”

Markus agreed with Schumm, saying public demand on a project created an expense that needed to be met with incentives.

“Setting numbers, length of term, percentage — that starts to really control what kind of public purpose you can achieve,” Markus said. “That’s why we do a financial analysis, to find out what the gap is.”

Schumm’s current plans do not set aside any units as affordable. He told the Journal-World in May he would try to meet the requirement if it were placed on his project, but he would likely need a greater incentive to do so.

Backup plan

Schumm has said the incentives he’s requesting would offset the cost of adding 22 underground parking spaces. A quote from Lawrence-based B.A. Green Construction estimates the underground parking at $1,138,020, or $51,728 per space.

If the incentives were rejected, Schumm could alter the project to complete it without them, he has said, but the development would not include parking. He would also change the condominiums to apartments.

Downtown housing developments do not have to include off-street parking, according to city code, though there’s a known demand for it.

Lot history

Schumm and his wife, Sandra, bought the north section of the property at 815 Vermont St. in the 1980s with the intent of restoring it, according to his application. It was the original site of the Lawrence House Hotel and later held a string of businesses.

Miller Print Shop had occupied a building in the south lot for several decades. A fire started in the shop Dec. 24, 1990, and destroyed both structures.

The lot, between the old Headmasters salon building and Vermont Street Station offices, has been vacant since.

In his application, Schumm wrote the property is “useless” as is and the area has “lost much vitality” since the fire. He went on to say his development would “attract existing and new high-tech personnel to live and work in Lawrence,” as well as support the effort for a downtown grocery store and a high-speed fiber network.

“This development makes good economic sense for our city,” he wrote.

If the incentives were to pass through multiple stages of city approvals, architectural drawings would likely be finished by October and construction would start in winter 2017, the application states.

The City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.