Local benefit requirement could be considered in city overhaul of economic incentives

Lawrence City Hall, 6 E. Sixth St., is pictured on May 3, 2016.

As developments aided by local tax dollars are built, it could be the pockets of out-of-state contractors and workers who benefit as concrete is poured, bricks laid and wiring strung.

But as the city works to rewrite its public incentives policy, that could change. Local leaders are interested in requiring that some degree of area or state resources be used for developments relying on economic incentives.

“I definitely think it’s something we should explore,” Vice Mayor Leslie Soden said. “We want those incentives to benefit our local community as much as possible, so by having a local preference that would hopefully help achieve that.”

Currently, millions of dollars of potential tax revenue — through property tax rebates, sales tax exemptions and other tax abatements — are being provided annually to developers. Last year, 28 such agreements were in effect, including apartment, hotel and industrial projects.

Mayor Mike Amyx also recently pushed the topic. At the commission’s most recent meeting, Amyx pointedly asked a local developer making an incentives request about his “willingness to buy local” for a project to convert an old East Lawrence warehouse into a restaurant, brewery and apartment building. The developer, Adam Williams, told Amyx that he uses local labor and materials, with exceptions for things such as elevators, which must be bought elsewhere.

“We buy everything local; all the labor is local,” Williams told the commission.

If Lawrence were to make a community benefit requirement more official, it wouldn’t be alone. Earlier this year, Kansas City passed a “community benefits plan.” The resolution asks that jobs or other local benefits be included in economic incentive agreements. Soden said it makes sense to require a certain percentage of jobs associated with a development to be filled by Douglas County workers.

“I think it’s reasonable to expect that a majority of their employees or contractors live within the county, so we can keep those payroll dollars circulating locally,” Soden said.

Community benefit agreements are used on a project-by-project basis across the country, in cities such as Minneapolis, Baltimore and Denver, to ensure components such as local labor, fair wages or other requirements. And voters in Detroit are about to take the idea further once they choose between two proposals for a community benefit ordinance for the city, according reports from the Detroit Free Press.

If such an ordinance were enacted in Lawrence, it would require additional oversight and handling by the city. Currently, the city doesn’t track whether publicly assisted developments use area contractors, according to Britt Crum-Cano, the city’s economic development coordinator. How much local construction materials and labor — and whether those workers receive quality wages and benefits — might also require a dedicated review process.

Kansas City, for instance, has a board that reviews the community benefits of incentive agreements, and Soden said something similar would likely be required if Lawrence were to adopt a policy. Realistic requirements would also need to be determined, as some specialized labor and materials would be hard to find locally or even in the state, Soden said.

“As for challenges, not all materials are made here in Douglas County; there’s definitely items we need to bring in,” Soden said. “…It’s important to keep those things in mind. We can’t just proclaim that everything related to a project has to come from Douglas County when it may not even be possible. That’s not fair.”

Tracy Green, president of Lawrence-based B.A. Green Construction Company, agreed that those considerations would be vital. Green said that while they always like to use local subcontractors and suppliers on their projects, sometimes they have not been able to find certain services — such as commercial-level masonry or precast concrete — in Douglas County.

“You literally have to travel a ways to find a supplier to provide that type of a product,” Green said.

For Green, it is also important to consider how widespread use of community benefit ordinances would affect his company, which does business in various nearby municipalities. For that reason, Green said they have been historically against such measures.

“Essentially, we wouldn’t want to be put at a competitive disadvantage based on a ‘home rule,’ if you want to call it that,” Green said. “…We’ve done as much work in Topeka, for instance, recently as we have in Lawrence.”

There may be other reverberating effects as well. If the city were to require certain labor or supplier standards be followed by private industry when it receives an incentive, it might have a weak argument for not holding itself to those same standards. That’s something that deserves some thought, according to Soden.

“I think that would be really important (to consider),” Soden said, noting that some cities require the use of organized labor.

So far though, a community benefit requirement hasn’t made its way onto the list of recommended changes to the city’s economic development policies. The City Commission reviewed a draft of those recommendations last month, and the topic is scheduled to come before the commission for further review on Dec. 20.