A rendering of the proposed redevelopment of a vacant warehouse at 826 Pennsylvania Street.

The City Commission voted to provide public incentives for a brewery, restaurant and apartment project in East Lawrence, but significantly decreased the amount of incentives from what was originally requested. The decrease was debated among commissioners, after which the developer readily agreed to the reduction.

The city is the process of changing its incentives policy, but the current policy states that tax rebates generally should not be greater than 50 percent. The mixed-use residential development project will be located in East Lawrence’s Warehouse Arts District, and the project’s developer, Williams Management LLC, requested a 10-year, 85 percent property tax rebate through the Neighborhood Revitalization Act.

“I think we should stick to the 50 percent until we have some good policy,” Vice Mayor Leslie Soden said at the commission’s meeting Tuesday.

Soden and Commissioners Stuart Boley and Matthew Herbert, all elected last year, campaigned on the notion that previous commissioners were overusing financial incentives for economic development. At that time, all six of the NRA tax rebates approved had been greater than 50 percent, several at 85 percent or above.

As part of the discussion about reducing the level of incentives, Commissioner Lisa Larsen asked the developer, Adam Williams, whether the project would still be able to proceed if the incentive was only 50 percent. Williams indicated that he would still go forward with the project.

The approximately $3.6 million project will convert the old SeedCo building at 826 Pennsylvania St. into a brewery, restaurant and apartment building. Newly constructed second and third floors would provide space for 14 apartments. The 85 percent rebate would have amounted to about $650,000 in public incentives from the city, county and school district. A sales tax exemption for the costs of construction materials and remodeling labor, via an industrial revenue bond, was also requested.

Some commissioners also took issue with the affordable housing component for the residential portion of the project. Plans call for two one-bedroom apartments to be designated as affordable housing units, and rent for these units would be set at $840 per month, which includes the cost of utilities. Commissioner Matthew Herbert, a high school teacher who also operates a residential rental company, didn’t think that was an affordable rate.

“As somebody who is in the housing industry and has property two blocks away from this, I can tell you it strikes me as odd that ($840) for a bedroom would be affordable housing,” Herbert said. “So I’m just trying to figure out where your definition is that that is affordable.”

Commissioners were told a median income index for the area was used to calculate an affordable amount, which determined that 60 percent of median family income is $31,380. Herbert disagreed with the use of that index, and pointed out that some agencies instead use median household income, which is significantly lower.

Several Lawrence residents also spoke during public comment that $840 was not an affordable amount, but other commissioners, as well as City Manager Tom Markus, pointed out that while the city’s Affordable Housing Advisory Board is in the process of setting guidelines to define what is considered affordable, those determinations aren’t final. Several commissioners commented that until guidelines were final, affordable housing was a “moving target” and it was difficult to fault the project on the issue.

“I think it’s difficult to criticize a project for not providing affordable housing, when we haven’t defined what the affordable housing we want to have is,” said Commissioner Stuart Boley. “I think that the applicant and (National Development Council) and staff made a good effort to identify that.”

Ultimately, the amended incentives request passed 4-1, with Herbert voting against it.

City staff and the Public Incentives Review Committee both recommended that the commission approve the incentives. Factors considered include the results of a cost-benefit and “but for” analysis, which is meant to show that public assistance is required for the project to be financially feasible. A 1.36 cost-benefit ratio was determined for the city, exceeding the threshold of 1.25. An outside firm, National Development Council, conducted the “but for” analysis, and found that the requested incentives are “reasonable” and help to avoid financing gaps that could make the project unlikely to proceed.

In addition to being approved by the city, NRA requests must be approved by the county and school district, which will consider their participation at meetings on Wednesday and Nov. 14.

In other business, commissioners:

• Approved changes to the court use policy at Sports Pavilion Lawrence, allowing all eight basketball/volleyball courts to be used for large events or tournaments up to 20 days per year. The current policy states that the facility will make at least one court available for free play during operating hours.

• Voted to extend the temporary bus stop location at the corner of Sixth and New Hampshire streets for Greyhound Bus until Jan. 15, 2017. The extension is meant to provide Greyhound adequate time to negotiate an agreement with a private party to serve as their bus stop/ticket agent, as the temporary location is not equipped for those services.

• Authorized the city manager to execute a two-year concessions agreement with Sandbar Subs, LLC. Sandbar Subs will provide concessions to the Parks and Recreation Department beginning in November.

• Voted to defer the public hearing for a public incentives request for a mixed-use residential project until Dec. 6. The plan for the project, located in the 800 block of Vermont Street, is not complete.