Proposed changes to Lawrence incentives deals draw concern from economic development board

Members of Lawrence’s Economic Development Council voiced concerns Monday to major changes — prompted by the City Commission — to incentives the city provides for new developments and incoming businesses.

Brady Pollington, vice president of the Economic Development Council of Lawrence and Douglas County, prefaced a discussion with the Joint Economic Development Council by saying incentives could be the factor that determines whether a company locates in Lawrence.

“It’s a process of elimination, not a process of selection. People like myself working on behalf of the community to attract a new company, what we’re doing is trying to not get eliminated,” Pollington said. “Sometimes — where you have two locations with the same quality workforce and real estate and the markets are ideal — which community gets the project could come down to the type of incentive.”

The JEDC held a special meeting Monday to review the changes proposed by city commissioners. The city’s Public Incentives Review Committee and the County Commission will provide input before the City Commission debates the changes later this month.

City Commissioners Stuart Boley, Matthew Herbert and Leslie Soden, all elected last year, campaigned that previous commissioners were overusing financial incentives. They’re proposing several changes to the policies that govern the incentives, including charging application fees for some incentives and increasing others and capping tax rebates at 50 percent over 10 years, with some room for exception. They also suggested introducing a requirement for residential developments receiving incentives to set aside units for low-income households.

The proposed changes prompted some disagreement Monday between the Economic Development Council, members of which wanted to maintain flexibility in the policies in order to attract developments, and city and county officials.

About the 50 percent, 10-year cap on tax rebates, Pollington advised it could turn off companies from the beginning of the recruitment process. But County Administrator Craig Weinaug said the policies should fall in line with what the City Commission would approve. If they don’t, the city would put time and money into an incentive deal that was “dead on arrival.”

“Obviously the people around this table would like to see that number higher, but it sets us up for failure if the policy doesn’t reflect what the city officials are willing to do,” Weinaug said.

The council had mixed opinions about increasing and creating fees for incentive applications. Pollington said — and others agreed — fees were “contradictory” to the incentives process. But City Manager Tom Markus said it was a “minimum barrier” that would keep away only those who “know they’re not really eligible.”

“I think, in this community, it’s a fair thing to charge the fees knowing there’s some tension about the use of incentives to begin with,” Markus said. “I think that shows we’re responsible with our time. I’m an advocate for cost-recovery.”

There’s also a new provision that gets at the City Commission’s effort to increase affordable housing. The new policy would require any residential development receiving public assistance to offer some units for households making 80 percent of the area’s median income.

For residential developments with four to 49 units, the requirement would be 10 percent of units. Developments with 50 or more units would have to provide at least 35 percent of them to low-income households. The units would have to be maintained as low-income for a minimum 15 years.

Markus, who came to Lawrence last month from his position as city manager of Iowa City, Iowa, said that city’s affordable housing requirement of 10 percent had the support of area developers.

Pollington questioned whether there was a percentage that would turn developers off a project.

“You said there was a lot of support from the development community at that 10 percent level, but what we’re seeing is 35, which has a little bit of sticker shock,” Pollington said.

Referring to all the changes, Weinaug said later, “I see all of these things as a reflection of the people we elected.”

Michael Orozco, a JEDC member, posed the question of whether the policies would create inconsistency if they were changed based on every City Commission’s stand on them. It was “a fair observation,” Markus said, and commissioners would have to consider it in their debate.

“I think they have to acknowledge that that’s the case,” Markus said. “You can have a majority flip in this town every two years.”

The Public Incentives Review Committee will discuss the changes from 9:30 to 11 a.m. May 17 at City Hall, 6 E. Sixth St. The County Commission will provide its feedback from 4 to 5 p.m. May 18 at the Douglas County Courthouse, 1100 Massachusetts St.